The purpose of this Act is to contribute to the development of national economy by attaining wideand orderly circulation of securities, and by protecting investors through fair issuance, purchase,sale or other transactions of securities.

7. Certificates or instruments issued by a foreign corporation, etc., which have the same nature asthose referred to in subparagraphs 1 through 6 of this paragraph;

8. Securities depository receipts which a person designated by the Presidential Decree issues basedon underlying certificates or instruments issued by a foreign corporation, etc.; and

9. Other certificates or instruments designated by the Presidential Decree, which are similar orrelated to those referred to in subparagraphs 1 through 8 of this paragraph.

(2) Such right as shall be represented by the securities referred to in each subparagraph ofparagraph (1) shall be regarded as such securities, even before certificates of such securitieshave been issued with respect to such rights.

(3) The term public offering of new securities in this Act shall mean a solicitation of an offerto acquire securities which are issued newly under the Presidential Decree. <Amended by Act No.4469, Dec. 31, 1991; Act No. 5254, Jan. 13, 1997>

(4) The term public offering of outstanding securities in this Act shall mean an offer to selloutstanding securities or a solicitation of an offer to buy those under the Presidential Decree.

<Amended by Act No. 4469, Dec. 31, 1991; Act No. 5254, Jan. 13, 1997>

(5) The term issuer in this Act shall mean a person who has issued or intends to issue anysecurities: Provided, That in issuing securities prescribed in paragraph (1) 8, the term issuershall mean a person who has issued or intends to issue certificates or instruments which are thebasis of such issuance. <Amended by Act No. 5254, Jan. 13, 1997>

(6) The term underwriting in this Act shall mean an act which falls under any of the followingsubparagraphs:

1. To acquire from an issuer all or a part of securities with a view to distributing, in connectionwith issuance of the securities;

2. To make a contract to acquire the unsold portion of securities with an issuer in connection withissuance of the securities, in a case where there is no one else to acquire it; and

3. To make arrangements on behalf of an issuer for a public offering of new or outstandingsecurities, or to participate directly or indirectly in a public offering of new or outstandingsecurities in part, for the purpose of a commission or reward.

(7) The term underwriter in this Act shall mean any person who conducts one of the activitiesreferred to in subparagraphs of paragraph (6). <Amended by Act No. 5423, Dec. 13, 1997>

(8) The term securities business in this Act shall mean any business which falls under any of thefollowing subparagraphs: <Amended by Act No. 5254, Jan. 13, 1997; Act No. 6423, Mar. 28, 2001;January 29, 2004>

1. To buy and sell securities;

2. To buy and sell securities on consignment;

3. To act as an intermediary or an agent with respect to purchase and sale of securities (excludingwhat falls under subparagraph 8);

4. To act as an intermediary or agent with respect to an entrustment of sale and purchasetransactions to be executed on a securities market, KOSDAQ, or market in foreign country

similar to those;

5. To underwrite securities;

6. To make a public offering of outstanding securities;

7. To arrange for a public offering of new or outstanding securities; and

8. To act as an intermediary or an agent with respect to the sale and purchase of securities andmake other sale and purchase of securities necessary for the relevant intermediary businessaccording to quotations falling under each of the following items for listed stocks or KOSDAQregistered stocks, making use of information communications networks and electronic data-processingequipment, on behalf of many persons at the same time:

(a) Final quotations of the relevant stocks published by the securities market or KOSDAQ; and

(b) The single price determined in such manner as prescribed by the Ordinance of the Ministry ofFinance and Economy.

(9) The term securities company in this Act means a company which conducts securities business inaccordance with this Act.

(10) and (11) Deleted. <by Act No. 6987, Oct. 4, 2003>

(12) The term securities market in this Act shall mean a market which is established by the KoreaExchange (hereinafter referred to as the Korea Exchange) organized under the Korea Exchange Actthat falls under a securities market within the meaning of Article 2(1) of the same Act.<Amended Jan. 29, 2004>

(19) The term outside director in this Act shall mean a director who does not engage in theregular business of the relevant company and is selected and appointed under Article 54-5 or191-16. <Newly Inserted by Act No. 6176, Jan. 21, 2000; Act No. 6423, Mar. 28, 2001>

2. A corporation that is neither KOSDAQ registered corporation nor listed corporation, which intendsto make a public offering of new or outstanding securities;

3. A corporation that is neither KOSDAQ registered corporation nor listed corporation, which intendsto merge with a stock-listed corporation or a KOSDAQ registered corporation;

4. Deleted; <by Act No. 6623, Jan. 26, 2002>

5. A corporation under incorporation which intends to make a public offering of new securities; and

6. A corporation which intends to grant the stock option pursuant to Article 189-4.

Article 4 (Documents for Registration)

An issuer of securities who applies for the registration pursuant to the provisions of Article 3shall file documents as determined by the Financial Supervisory Commission such as generalsituations and property conditions of the company, with the Financial Supervisory Commission. Incase where any significant matters stated in the filed documents are modified, such informationshall also be filed with the Financial Supervisory Commission. <Amended by Act No. 4469, Dec.31, 1991; Act No. 5498, Jan. 8, 1998>

With respect to a corporation which has been registered with the Financial Supervisory Commissionpursuant to the provisions of Article 3 (hereinafter referred to as a registered corporation),the Financial Supervisory Commission may prescribe the criteria for sound management of theregistered corporation such as financing the corporate and improving financial structure, and makenecessary recommendations. <Amended by Act No. 5498, Jan. 8, 1998>[This Article Wholly Amended by Act No. 3541, Mar. 29, 1982]

CHAPTER III REGISTRATION STATEMENT

Article 7 (Scope of Application)

No provisions of this Chapter shall apply to the securities referred to in Article 2 (1) 1 through3 (including bonds that are deemed bonds of subparagraph 3 in other Acts and subordinate

statutes, but excluding bonds prescribed by the Presidential Decree) and 5 and to such othersecurities as determined by the Presidential Decree. <Amended by Act No. 4469, Dec. 31, 1991;Act No. 6423, Mar. 28, 2001>

Article 8 (Registration of Public Offering)

(1) Where the total value of a public offering of new or outstanding securities, which iscalculated as prescribed by the Ordinance of the Ministry of Finance and Economy, is not less thanthe amount prescribed by the Ordinance of the Ministry of Finance and Economy, the public offeringof such securities may not be made unless the issuer files a registration statement on suchsecurities with the Financial Supervisory Commission and the registration statement is accepted bythe Financial Supervisory Commission: Provided, That if the issuer determines a period in which heis to issue securities pursuant to the Ordinance of the Ministry of Finance and Economy, and filesen bloc a registration statement of securities to be offered publicly during the period(hereinafter referred to as shelf registration statement) with the Financial SupervisoryCommission, and the shelf registration statement is accepted by the Financial SupervisoryCommission, he shall not be required to file separately the registration statement on securities tobe offered publicly in such period. <Amended by Act No. 4469, Dec. 31, 1991; Act No. 5254, Jan.13, 1997; Act No. 5498, Jan. 8, 1998; Act No. 5539, May 25, 1998; Act No. 6423, Mar. 28, 2001>

(2) Matters on the predictions or prospects for the issuers future financial status or results ofoperation which fall under any of the following subparagraphs (hereinafter referred to aspredicted information) may be entered or indicated in a registration statement under paragraph(1). In this case, the entry or indication of predicted information shall be made through themethods as prescribed in Article 14 (2) 1, 2 and 4: <Newly Inserted by Act No. 5736, Feb. 1,1999>

1. Matters on the issuers results of operation such as size in sales and revenues, or otherpredictions or prospects for results of operation;

2. Matters on the predictions or prospects for the issuers financial status such as the size incapital stock and funds flows;

3. Matters on the issuers results of operation or changes in financial status, and targeted levelsat a certain point due to the occurrence of a particular event or the establishment of a particularplan; and

4. Other matters on the predictions or prospects for the issuers future as determined by thePresidential Decree.

(3) In filing a registration under paragraph (1), where the matters to be entered in suchregistration or accompanying documents are the same as those which have already been filed, theCommission may allow the issuer to substitute the documents referring to the same information whichhas already been filed for the above documents. <Amended by Act No. 5423, Dec. 13, 1997; Act No.5539, May 25, 1998; Act No. 6176, Jan. 21, 2000>

(4) In filing a registration under paragraph (1), the representative director of the relevantissuer and any director in charge of filing the registration (in the case of the absence of thedirector in charge of filing the registration, referring to any person who executes the duties ofthe relevant director; hereafter the same in this Article shall apply) shall put each signature tothe registration statement after confirming and examining matters prescribed by the PresidentialDecree, including the fact that the entries of matters that may affect investment judgment or thevalue of securities and the entries of other important matters prescribed by the PresidentialDecree and indications in the registration statement are not omitted or falsified from among theentries of the relevant registration statement. <Newly Inserted by Act No. 7025, Dec. 31,2003>

(1) A statement pursuant to the provisions of Article 8 (1) (hereinafter referred to as aregistration statement) shall come into force on such date as the time period prescribed by theOrdinance of the Ministry of Finance and Economy elapses after the receipt thereof by the FinancialSupervisory Commission. <Amended by Act No. 5254, Jan. 13, 1997; Act No. 5498,

Jan. 8, 1998; Act No. 5539, May 25, 1998>

(2) The effect taken pursuant to the provisions of paragraph (1) shall not be construed as assuringthat the truth or the accuracy of such matters stated in the registration statement has beenrecognized on its face value or that the Government has guaranteed or approved the value of thesecurities specified in the registration statement. <Amended by Act No. 5498, Jan. 8, 1998>

(1) In case where there is an offer to acquire or purchase securities, unless a registrationstatement has taken effect pursuant to the provisions of Article 9, no issuer or seller ofsecurities specified therein nor his agent shall accept such offer. <Amended by Act No. 3541,Mar. 29, 1982>

(2) No issuer who filed a shelf registration statement pursuant to the proviso of Article 8 (1),shall accept any offer for acquisition or purchase of securities, unless he files additionaldocuments of shelf registration statement determined by the Presidential Decree at each time hemakes a public offering of new or outstanding securities. <Newly Inserted by Act No. 4469, Dec.31, 1991; Act No. 5423, Dec. 13, 1997; Act No. 5539, May 25, 1998; Act No. 6176, Jan. 21, 2000>

Article 11 (Amendment Statement)

(1) If it appears to the Financial Supervisory Commission that a registration statement is

incomplete in its form or inadequate in any material information required to be stated therein, theFinancial Supervisory Commission may, with presenting the reasons thereof, issue an order to filean amendment statement. <Amended by Act No. 5498, Jan. 8, 1998>

(2) In case where an order is issued pursuant to the provisions of paragraph (1), the registrationstatement concerned shall be construed not to be received by the Commission after the date on whichthe order is issued.

(3) A person who has filed a registration statement may file an amendment statement, if thereoccurs any modification in matters entered in the registration statement before the day ofsubscription as determined by the statement commences. In this case, if important matters asdetermined by the Ordinance of the Ministry of Finance and Economy are modified, the amendmentstatement thereof shall be filed without fail. <Amended by Act No. 3945, Nov. 28, 1987; Act No.4469, Dec. 31, 1991; Act No. 5423, Dec. 13, 1997; Act No. 5539, May 25, 1998>

(4) A person who filed a shelf registration statement as prescribed in the proviso of Article 8(1), notwithstanding the provisions of paragraph (3), may file an amendment statement before thepredetermined issue period is terminated. In this case, the predetermined issue amount and periodmay not be revised. <Newly Inserted by Act No. 4469, Dec. 31, 1991>

(5) If an amendment statement is filed pursuant to the provisions of paragraph (1), (3) or (4), aregistration statement on securities shall be regarded as filed and received on the day of receiptof the amendment statement. <Amended by Act No. 4469, Dec. 31, 1991>

Article 12 (Preparation and Disclosure of Prospectus)

(1) When an issuer of securities makes a public offering of new or outstanding securities pursuantto Article 8, such issuer shall prepare a prospectus under the conditions as determined by thePresidential Decree, and make it available for public inspection at a place determined by theOrdinance of the Ministry of Finance and Economy. <Amended by Act No. 3541, Mar. 29, 1982; ActNo. 3945, Nov. 28, 1987; Act No. 4469, Dec. 31, 1991; Act No. 5254, Jan. 13, 1997; Act No. 5423,Dec. 13, 1997; Act No. 5539, May 25, 1998; Act No. 6176, Jan. 21, 2000>

(2) In the prospectus as prescribed in paragraph (1), particulars different from the contents

mentioned in the registration statement (including additional documents of shelf registrationstatement as prescribed in Article 10 (2); hereafter the same shall apply in this Chapter) shallnot be mentioned, or matters to be entered in the registration statement shall not be omitted:Provided, That the same shall not apply to the matters as prescribed by the Presidential Decreefrom among matters which are not appropriate for being offered for public inspection, consideringbalance between interests of keeping secret in management of business and protection of investors.<Amended by Act No. 4469, Dec. 31, 1991; Act No. 5254, Jan. 13, 1997>

Article 13 (Justifiable Use of Prospectus)

(1) No one shall be permitted to allow any other person to acquire securities the registration ofwhich has taken effect or shall sell such securities to such other person before a prospectusprepared in accordance with the provisions of Article 12 is, upon a request by the other person,given to him. In this case, when the prospectus is given in the form of digitally recorded documentin accordance with the provisions of Article 194-2, such prospectus shall be deemed to be givenwhen requirements falling under each of the following subparagraphs are satisfied:

1. It is required that a person to receive or be transmitted with a digitally recorded document(hereinafter referred to as the recipient of digitally recorded document) agree to the receipt orthe transmission of a prospectus in the form of the digitally recorded document;

2. It is required that the recipient of digitally recorded document designate the kind of anelectronically transferable media through and a place at which he receives or is transmitted withthe digitally recorded document;

3. It is required to confirm that the recipient of digitally recorded document has received or hasbeen transmitted with a digitally recorded document; and

4. The digitally recorded document is required to be identical in content with the prospectus paper.

(2) Where any person intends to induce subscriptions for new or outstanding securities subject tothe registration under the provisions of Article 8 for the purpose of executing a public offering

or other transactions thereof, he shall induce such subscriptions in a manner falling under any ofthe following subparagraphs:

1. A manner in which the prospectus under the provisions of Article 12 is used after theregistration of securities comes into force under the provisions of Article 9 (1);

2. A manner in which an issuer uses a preliminary prospectus (referring to the prospectusadditionally indicating the fact that the registration has yet to come into force) prepared on theconditions as prescribed by the Presidential Decree before the registration of securities comesinto force after such registration has been accepted under the provisions of Article 9 (1); and

3. A manner in which an issuer uses a simple prospectus (referring to a document, a digitallyrecorded document and other devices or indications similar to them that omit part of matters orinclude extracted matters from among the matters to be entered in the prospectus statement)prepared on the conditions as prescribed by the Presidential Decree through ads. making use ofnewspapers, broadcasts and magazines, etc., handbooks, publicity leaflets, or electronicallytransferable media after his registration of securities is accepted under the provisions of Article9 (1).

[This Article Wholly Amended by Act No. 6176, Jan. 21, 2000]

Article 14 (Liabilities for Compensation Due to False Statements)

(1) If a purchaser of securities sustains damage because a registration statement or a prospectus(including a preliminary prospectus and a simple prospectus; hereafter in this Article the sameshall apply) of securities as prescribed in Article 12 includes false statements or indications orfails to state or indicate important matters, the following persons shall be liable to compensatefor the damage: Provided, That the same shall not apply where a person who may be liable forcompensation proves that he could not know such false facts or omissions of that prospectus inspite of his exercise of due diligence, or where the purchaser of such securities has known thefact at the time of his offering to acquire them: <Amended by Act No. 6176, Jan. 21, 2000; ActNo. 7025, Dec. 31, 2003>

1. A registrant under the registration statement concerned and directors of the corporationconcerned at the time of registration (if the registration statement is filed before thecorporation

is incorporated, its promoter);

1-2. A person who falls under each subparagraph of Article 401-2 (1) of the Commercial Act and is incharge of instructing the preparation of the registration statement on the securities or filingsuch registration;

2. A certified public accountant, an appraiser and a credit-rating specialist, etc. who are eachprescribed by the Presidential Decree (including any organization to which each of them belongs)and authenticate and sign the truth and correctness of the entries or accompanied documents of therelevant registration statement on securities;

2-2. A person who agrees to enter his opinion on the assessment, analysis and confirmation of theentries of the registration statement on securities or the accompanied documents in the relevantregistration statement and confirms details of the entries;

3. A person who has made a contract to underwrite the securities with the issuer;

4. A person who has prepared or delivered the prospectus; and

5. A holder of outstanding securities offered for sale at the time of registration for publicoffering of outstanding securities.

(2) Where predicted information is entered or indicated through the following methods, any personfalling under any subparagraph of paragraph (1), notwithstanding the provisions of paragraph (1),shall not be liable to compensate for the damage concerned: Provided, That this shall not applywhere the purchaser of securities does not know the fact that there are false entries orindications in predicted information or that material matters are not entered or indicated at thetime of his offering to acquire them, and where he proves that any person falling under anysubparagraph of paragraph (1) was by intention or by gross negligence responsible for the entry orindication:

1. The entry or indication concerned shall specify that it is predicted information;

2. The basis for the assumption or judgement for predictions or prospects shall be specified;

3. The entry or indication concerned shall be faithfully made on the basis of rational foundations

or assumptions; and

4. A warning phrase that predicted values may differ from actual results shall be specified in theentry or indication concerned.

(3) The provisions of paragraph (2) shall not apply where a corporation other than stock-listedcorporations and KOSDAQ registered corporations submits a registration statement of securities forthe first time for the public offering of new or outstanding securities. <Amended Jan. 29,2004>

[This Article Wholly Amended by Act No. 5736, Feb. 1, 1999]

Article 15 (Amount of Liability to be Compensated)

(1) The amount to be compensated for damage pursuant to the provisions of Article 14 shall be thedifference between the amount actually paid by the claimant for the acquisition of securities andthe amount which falls under any of the following subparagraphs:

1. The market price of securities at the time of the closing of oral proceedings, if a lawsuit isentered against the securities concerned (in case where no market price is available, an estimatedprice at which the securities would be disposed of); and

2. The price at which the securities were disposed of, in case where such disposition of securitieshas been made prior to the time of the closing of oral proceedings referred to in subparagraph 1 ofthis paragraph.

(2) Notwithstanding the provisions of paragraph (1), where a person liable for compensation fordamage pursuant to the provisions of Article 14 proves that a claimant has sustained all or part ofthe damage without regard to any false statement or indication or any omission of the entry orindication of material matters, he is not bound to compensate for damage of such part. <NewlyInserted by Act No. 5254, Jan. 13, 1997>

Article 16 (Extinction of Claims)

The compensation liabilities for damage pursuant to the provisions of Article 14 shall beextinguished, unless the claimant exercises such right within one year from the date on which hediscovers the fact or within three years from the time when a registration statement has takeneffect.

A registration statement of securities and an after-report pursuant to Article 17 (hereinafterreferred to as an after-report) shall be kept in the Financial Supervisory Commission and madeavailable for public inspection under the conditions as prescribed by the Presidential Decree:Provided, That the same shall not apply to the matters as prescribed by the Presidential Decreefrom among matters which are not appropriate for being offered for public inspection, consideringbalance between interests of keeping secret in management of business and protection of investors.<Amended by Act No. 5254, Jan. 13, 1997; Act No. 5498, Jan. 8, 1998>

Article 18-2 (Public Offering without Filing Registration Statement)

Any issuer who makes a public offering of new or outstanding securities without filing aregistration statement in accordance with the provisions of Article 9 (1) shall disclose mattersconcerning his financial standing and take measures prescribed by the Presidential Decree toprotect investors.

[This Article Newly Inserted by Act No. 6176, Jan. 21, 2000]

Article 19 (Report and Investigation)

(1) The Financial Supervisory Commission, if necessary in the public interest or for protection ofinvestors, may order a registrant under the registration statement, an issuer of securities, anunderwriter thereof, and any other related persons to file a report or materials for reference, ormay have the Governor of the Financial Supervisory Service established under the Act on theEstablishment, etc. of Financial Supervisory Organizations (hereinafter referred to as theFinancial Supervisory Service) investigate account books, documents and any other relatedmaterials of such registrant, issuer, underwriter and other related persons. <Amended by Act No.5254, Jan. 13, 1997; Act No. 5498, Jan. 8, 1998>

(2) A person who investigates pursuant to the provisions of paragraph (1) shall carry along acertificate which proves his authority to investigate and shall present such certificate to personsconcerned. <Amended by Act No. 5254, Jan. 13, 1997>

Article 20 (Disposition Right of Financial Supervisory Commission)

In the case falling under any of the following subparagraphs, the Financial Supervisory Commission,after showing reason therefor and making a public notice of such fact, order the issuer ofsecurities concerned to make an amendment, and if necessary, the Financial Supervisory Commissionmay suspend or prohibit the issuance of such securities, public offering of new or outstandingsecurities or other transactions with respect thereto or may take measures as prescribed by thePresidential Decree. In this case, the Financial Supervisory Commission may determine proceduresand criteria necessary for taking measures against the issuer of securities: <Amended by Act No.5254, Jan. 13, 1997; Act No. 5498, Jan. 8, 1998; Act No. 6176, Jan. 21, 2000; Act No. 6423, Mar.28, 2001>

1. In case that a registration statement or an after-report is not submitted or such statement orsuch report contains false statements or omits important matters;

2. In case that a prospectus does not comply with the provisions of Article 12 or 13;

3. In case that a violation of the provisions of Article 13 (2) is committed with respect to thepublic offering of new or outstanding securities and other transactions of securities through apreliminary prospectus or a simple prospectus; and

4. In case that a violation of the provisions of Article 18-2 is committed.

CHAPTER IV TENDER OFFER FOR SECURITIES

Article 21 (Applicable Object of Tender Offer)

(1) A person who intends to acquire voting stocks or any other securities as prescribed by thePresidential Decree (hereinafter referred to as stocks, etc.) through purchase, exchange, bid orany other acquisition by transfer (hereafter referred to as purchase, etc. in this Chapter) frompersons of not less than the number as prescribed by the Presidential Decree outside the securitiesmarket or KOSDAQ during the period as prescribed by the Presidential Decree shall acquire thestocks, etc. through tender offer, in case where the total number of the stocks, etc. held(including the cases prescribed by the Presidential Decree as owning or its equivalent; hereafterthe same shall apply in this Chapter and Article 200-2) by the person himself and specially relatedpersons (this means the specially related person as prescribed by the Presidential Decree;hereinafter the same shall apply) after the purchase, etc. is 5/100 or more of the total number ofthe stocks, etc. (including the case where the person himself and specially related persons whohave acquired 5/100 or more of the total number of the stocks, etc. make purchase, etc. of thestocks, etc.): Provided, That the same shall not apply with respect to purchase, etc. as prescribedby the Presidential Decree, considering the type thereof and ther circumstances. <Amended Jan.29, 2004>

(2) Deleted. <by Act No. 5521, Feb. 24, 1998>

(3) In this Chapter, the term tender offer means making an offer to buy stocks, etc. (includingexchange with other securities; hereafter the same shall apply in this Chapter) or a solicitationof an offer to sell stocks, etc. (including exchange with other securities; hereafter the sameshall apply in this Chapter) against many and unspecified persons, and buying them outside thesecurities market and KOSDAQ. <Amended Jan. 29, 2004>

(4) Number of stocks, etc. and total number of stocks, etc. pursuant to the provisions of paragraph(1) shall be the number calculated by the method as prescribed by the Ordinance of the Ministry ofFinance and Economy. <Amended by Act No. 5521, Feb. 24, 1998; Act No. 5539,

May 25, 1998>

(5) The term person handling tender offer affairs means a person in charge of keeping in custodystocks, etc. to be purchased, paying funds necessary for making tender offer or offering securitiessubject to a swap and handling administrative affairs related to tender offer on behalf of anyperson who intends to make tender offer. In this case, any person qualified to act as such agentshall be limited to a securities company. <Newly Inserted by Act No. 6423, Mar. 28, 2001>[This Article Wholly Amended by Act No. 5254, Jan. 13, 1997]

(1) Any person who intends to make tender offer shall publish matters falling under each of thefollowing subparagraphs (hereinafter referred to as publication of tender offer) under theconditions as prescribed by the Presidential Decree:

1. A person who intends to make tender offer;

2. A person who issues stocks, etc. subject to tender offer;

3. The objective of tender offer;

4. Kinds and numbers of stocks, etc. subject to tender offer;

5. The period of tender offer and tender offer conditions such as prices, settlement date, etc.; and

6. Details of purchase funds and other matters prescribed by the Presidential Decree.

(2) Any person who has published his tender offer (hereinafter referred to as tender offerershall file a statement containing matters falling under each of the following subparagraphs withthe Financial Supervisory Commission (hereinafter referred to as a tender offer statement) on thedate on which his tender offer is published (hereinafter referred to as the publication date oftender offer) under the conditions as prescribed by the Presidential Decree: Provided, That in theevent that the publication date of tender offer falls under any holiday or any other day

prescribed by the Financial Supervisory Commission, the tender offer statement may be submitted onthe day next thereto:

1. Matters concerning tender offerer and specially related persons;

2. Issuers of stocks, etc. subject to tender offer;

3. Objective of tender offer;

4. Kinds and numbers of stocks, etc. subject to tender offer;

5. Period of tender offer and tender offer conditions such as prices and settlement date, etc.;

6. In the event a contract exists that aims for the purchase of stocks, etc. without depending ontender offer after the publication date of tender offer, details of such contract; and

7. Details of purchase funds and other matters prescribed by the Presidential decree.

(3) The period of tender offer referred to in paragraphs (1) and (2) shall be set within the scopeof the period prescribed by the Presidential Decree.

In case where a person has made purchase, etc. of stocks, etc. in violation of the provisions ofArticle 21 (1) or 21-2 (1) and (2), he may not exercise the voting rights on the stocks concerned(including stocks which are acquired through exercise of rights related to the stocks, etc.concerned) during the period as prescribed by the Presidential Decree, and the FinancialSupervisory Commission may order to dispose of the stocks, etc. concerned (including stocks whichare acquired through exercise of rights related to the stocks, etc. concerned). <Amended by ActNo. 5498, Jan. 8, 1988; Act No. 5521, Feb. 24, 1998; Act No. 6423, Mar. 28, 2001>[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 22 (Submission of Copy of Tender Offer Statement)

Any tender offerer shall, when he files a tender offer statement, promptly send a copy thereof toeach of issuers of stocks, etc. subject to his tender offer (referring to persons prescribed by thePresidential Decree in case of stocks, etc. prescribed by the Presidential Decree; hereafter inthis Chapter the same shall apply) and also submit such copy to the Korea Exchange. <AmendedJan. 29, 2004>

[This Article Wholly Amended by Act No. 6423, Mar. 28, 2001]

Article 23 (Restrictions on Purchases by Tender Offerer)

(1) [Deleted] <Jan. 17, 2005>

(2) Except for the case as prescribed by the Presidential Decree, no tender offerer (including aspecially related person and any person handling tender offer affairs) shall, during the periodfrom the date on which tender offer is submitted to the Financial Supervisory Commission pursuantto Article 21-2(2) to the date on which period of tender offer expires, make any purchase ofsecurities by other means than a tender offer. <Amended Jan. 17, 2005>

(3) [Deleted] <Jan. 17, 2005

(4) [Deleted] <Jan. 17, 2005.

[This Article Wholly Amended by Act No. 5254, Jan. 13, 1997]

Article 23-2 (Amendment Statement and Publication, etc.)

(1) Any tender offerer, in case where he intends to modify the terms for purchase, shall file anamendment statement by the date on which period of tender offer expires: Provided, That reductionof purchase price, decrease of number of stocks, etc. which are intended to be purchased, extensionof payment period of purchase amount and other purchase conditions as prescribed by thePresidential Decree shall not be modified. <Amended by Act No. 5423, Dec.

13, 1997; Act No. 5539, May 25, 1998; Act No. 6176, Jan. 21, 2000>

(2) Any tender offerer shall, when he files an amendment statement under paragraph (1), promptlypublish the fact and details of what is amended (limited to matters contained in the publication oftender offer). In this case, the method of making such publication shall be governed by theprovisions of Article 21-2 (1). <Newly Inserted by Act No. 6423, Mar. 28, 2001>

(3) If an amendment statement is filed by a tender offerer in accordance with Article 23(1) or if aan amendment statement is filed as ordered by the Financial Supervisory Commission, the period oftender offer shall expire:

1. If the date on which the amendment statement is filed falls within 10 days prior to the end ofthe period of tender offer reported in accordance with Article 21-2(1)-5, on the 10thday following the filing of the amendment statement; or

2. If the date on which the amendment statement is filed does not fall within 10 days prior to theend of the period of tender offer reported in accordance with Article 21-2(1)-5, on the day whenthe period of tender offer ends.

(1) A tender offerer (including any person handling tender offer affairs), when he intends topurchase securities through tender offer, shall prepare a prospectus for such tender offer(hereinafter referred to as prospectus for tender offer) under the conditions as prescribed bythe Ordinance of the Ministry of Finance and Economy, and shall keep it at the place as prescribedby the Ordinance of the Ministry of Finance and Economy in order to make it available for publicinspection. <Amended by Act No. 5254, Jan. 13, 1997; Act No. 5539, May 25, 1998; Jan. 17,2005>

(2) The provisions of Article 13 shall apply mutatis mutandis to the use of a prospectus for

tender offer.

Article 24-2 (Withdrawal of Tender Offer)

(1) A tender offerer may not withdraw a tender offer after it filed a tender offer pursuant toArticle 21-2(2): Provided, That in such case as prescribed by the Presidential Decree, he maywithdraw a tender offer by the last day of the tender offer period. <Amended Jan. 17, 2005>

(3) A person who accepts an offer to buy stocks, etc. subject to tender offer or gives his offer(hereinafter referred to as tender) to sell them (hereinafter referred to as a tenderingstockholder), may cancel such tender at any time during tender offer period. In this case, atender offerer may claim damages or penalty due to cancellation of tender by a tenderingstockholder.

[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 25 (Presentation of Opinion on Tender Offer)

An issuer of stocks, etc. for which a tender offer statement has been filed, may present hisopinion on the tender offer concerned under the conditions as prescribed by the PresidentialDecree. In this case, the issuer shall file a written statement describing the contents of suchopinion without delay with the Financial Supervisory Commission and the Korea Exchange. <Amendedby Act No. 5254, Jan. 13, 1997; Act No. 5498, Jan. 8, 1998; Jan. 29, 2004>

Article 25-2 (Conditions and Manners of Tender Offer)

(1) A tender offerer shall purchase without delay all the stocks, etc. tendered according to thepurchase conditions and manners stated in the tender offer statement on and after the day followingthe expiration date of tender offer period: Provided, That in case where the Presidential Decreeprescribes, the same shall not apply.

(1) The provisions of Article 14 (1) shall apply mutatis mutandis to damages which a person fallingunder any of the following subparagraphs causes to tendering stockholder in connection with atender offer statement and public notice thereof, an amendment statement and public notice thereofpursuant to Article 23-2, and a prospectus for tender offer: <Amended by Act No. 5736, Feb. 1,1999>

1. A registrant stated in a tender offer statement and an amendment statement thereof (includingspecially related persons of the registrant, and in case where the registrant is a juristic person,including directors of the juristic person) and his agent; and

The Financial Supervisory Commission and the Korea Exchange shall keep the tender offer statement,amendment statement pursuant to Article 23-2, withdrawal statement pursuant to Article 24-2 (2),and written statement pursuant to Article 25 for 3 years from the date on which such statementshave been received and shall make them available for public inspection. <Amended by Act No.5498, Jan. 8, 1998; Act No. 6423, Mar. 28, 2001; Jan. 29. 2004>

[This Article Wholly Amended by Act No. 5254, Jan. 13, 1997]

Article 27 (Request for Materials to Tender Offerer)

The Financial Supervisory Commission, if necessary in the public interest or for the protection ofinvestors, may order any tender offerer, any person related to the tender offerer, and any issuerof the securities concerned to file a report or material for reference. <Amended by Act No.5498, Jan. 8, 1998>

Article 27-2 (Provisions to be Applied Mutatis Mutandis)

The provisions of Articles 17, 19 and 20 shall apply mutatis mutandis to the tender offer. In thiscase, the Financial Supervisory Commission as referred to in Article 17 shall be deemed to be theFinancial Supervisory Commission and Korea Exchange. <Amended by Act No. 5736, Feb. 1, 1999;Jan. 29, 2004>

[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

CHAPTER V SECURITIES BUSINESS

SECTION 1 License

Article 28 (License)

(1) A person who may be engaged in the securities business shall be a stock company which hasobtained a license from the Financial Supervisory Commission by the type of business. <Amendedby Act No. 5254, Jan. 13, 1997; Act No. 5539, May 25, 1998; Act No. 5982, May 24, 1999>

(2) The type of business referred to in paragraph (1) shall be as follows: <Amended by Act No.6423, Mar. 28, 2001>

1. The business referred to in Article 2 (8) 1;

2. The business referred to in Article 2 (8) 2 through 4;

3. The business referred to in Article 2 (8) 5 through 7; and

4. The business referred to in Article 2 (8) 8.

(3) The capital of a securities company shall not be less than one billion won and an amountprescribed by the Presidential Decree according to the scope of its business. <Amended by ActNo. 6176, Jan. 21, 2000>

(4) Deleted. <by Act No. 5254, Jan. 13, 1997>

(5) The Financial Supervisory Commission may set conditions to a license referred to in paragraph(1). <Newly Inserted by Act No. 5736, Feb. 1, 1999; Act No. 5982, May 24, 1999>

(6) Deleted. <by Act No. 5254, Jan. 13, 1997>

(7) Deleted. <by Act No. 5736, Feb. 1, 1999>

Article 28-2 (Securities Business by Foreign Securities Company)

(1) If a foreign securities company (this refers to a person engaged in securities business in aforeign country pursuant to the relevant Acts and subordinate statutes of such country; hereinafterthe same shall apply) intends to establish a branch office or any other business office in order tooperate the securities business in the Republic of Korea, it shall obtain a license from theFinancial Supervisory Commission by the type of business in accordance with the provisions of eachsubparagraph of Article 28 (2). <Amended by Act No. 5254, Jan. 13, 1997; Act No. 5539, May 25,1998; Act No. 5982, May 24, 1999; Act No. 6176, Jan. 21, 2000>

(2) The business fund for any branch office or any other business office under the provisions ofparagraph (1) shall not be less than one billion won and an amount prescribed by the PresidentialDecree according to the scope of its business. <Newly Inserted by Act No. 6176, Jan. 21,2000>

(3) A foreign securities company which has not obtained the license for establishment of branchoffice, etc. pursuant to paragraph (1) shall not conduct the securities business with domesticresidents. <Newly Inserted by Act No. 5254, Jan. 13, 1997>

(4) The branch office or any other business office licensed pursuant to paragraph (1) shall beregarded as a securities company organized under this Act, except for the provisions of Article 28(3). <Amended by Act No. 5254, Jan. 13, 1997>

(5) If a domestic branch office or other business office of a foreign securities company goes intoliquidation or becomes bankrupt, its domestic holding assets shall be appropriated preferentiallyfor a performance of obligation to a person who is the other party of securities transaction andhas a domicile or residence in Korea at the time of the transaction. In this case, the scope of itsdomestic holding assets shall be determined by the Presidential Decree. <Newly Inserted by ActNo. 4469, Dec. 31, 1991; Act No. 5254, Jan. 13, 1997>

(6) If it is deemed difficult to conduct the securities business because a domestic branch officeor other business office of a foreign securities company has violated this Act, an order ordisposition made under this Act, or foreign Acts and subordinate statutes, the FinancialSupervisory Commission may revoke the business license, suspend business, or take other necessarymeasures for the purpose of protecting the public interest or investors. The same shall apply incase where it is deemed difficult to conduct securities business of a domestic branch office orother business office of the foreign securities company by reason that the foreign securitiescompany has violated foreign Acts and subordinate statutes, etc. <Newly Inserted by Act No.4469, Dec. 31, 1991; Act No. 5254, Jan. 13, 1997; Act No. 5498, Jan. 8, 1998; Act No. 5539, May 25,1998; Act No. 5982, May 24, 1999>

(7) The Financial Supervisory Commission may set conditions to the license referred to in paragraph(1). <Newly Inserted by Act No. 5736, Feb. 1, 1999; Act No. 5982, May 24, 1999>

(8) Necessary matters relating to the operation of the securities company by a foreign securitiescompany shall be prescribed by the Presidential Decree.

[This Article Newly Inserted by Act No. 3541, Mar. 29, 1982]

Article 29 (Provisions Applicable to Persons Who Operate Securities Business as Side

Business)

(1) Deleted. <by Act No. 5736, Feb. 1, 1999>

(2) This Chapter shall apply within the scope of licensed business to a person who, upon license ofsecurities business pursuant to this Chapter, operates securities business as a side business:Provided, That the provisions of Articles 28 (3), 33, 47, and 62 shall not apply. <Amended byAct No. 3945, Nov. 28, 1987; Act No. 5254, Jan. 13, 1997; Act No. 5736, Feb. 1, 1999>

Article 30 (Application for License)

(1) Any person who intends to obtain a license pursuant to the provisions of Articles 28 (1) and28-2 (1) shall file an application with the Financial Supervisory Commission under the conditionsas prescribed by the Presidential Decree.

(2) The Financial Supervisory Commission may, where such application it receives under theprovisions of paragraph (1) is found to be insufficient, ask the applicant to supplement suchapplication. In this case, the period required to supplement such application shall not be added tothe period under the provisions of Article 31 (1).

[This Article Wholly Amended by Act No. 6176, Jan. 21, 2000]

Article 31 (Procedure of License)

(1) When the Financial Supervisory Commission has received the written application pursuant to theprovisions of Article 30, it shall make a decision either granting or denying a license and shallnotify the applicant of the decision in writing without delay. <Amended by Act No. 5254, Jan.13, 1997; Act No. 5539, May 25, 1998; Act No. 5982, May 24, 1999>

(2) Deleted. <by Act No. 3945, Nov. 28, 1987>

Article 32 (Requirements for License)

(1) Any person who intends to obtain a license for his securities business in accordance with theprovisions of Article 28 (1) shall satisfy requirements falling under each of the followingsubparagraphs:

1. He is required to satisfy requirements under the provisions of Article 28 (3);

2. He is required to be able to protect investors and have manpower, computer installations andother physical facilities enough to carry out securities business he intends to run;

3. He is required to have a proper and sound business plan; and

4. Any such major investor as prescribed by the Presidential Decree (in case that an investor is acorporation, this includes any person who virtually exercises his influence over important mattersconcerning the management of such corporation and is prescribed by the Presidential Decree shall beincluded) is required to have a sufficient investment capability, a sound financial standing andsocial credit.

(2) Any foreign stockbroker who intends to obtain a license for the establishment of his branchoffice or other business office pursuant to the provisions of Article 28-2 (1) shall meetrequirements falling under each of the following subparagraphs:

1. He has to satisfy requirements under the provisions of Article 28-2 (2);

2. He has to have property, financial standing, and business capability enough to carry outsecurities business in the country and has to have a full and high international credit rating; and

3. He has to meet requirements under paragraph (1) 2 and 3.

(3) Necessary matters concerning detailed requirements for a license under paragraphs (1) and (2)shall be prescribed by the Presidential Decree.

[This Article Wholly Amended by Act No. 6176, Jan. 21, 2000]

Article 32-2 (Public Notice of License)

The Financial Supervisory Commission shall, when it grants a license in accordance with theprovisions of Articles 28 (1) and 28-2 (1), promptly publish the grant of such license in theOfficial Gazette and make the grant of such license known to the public through computercommunications, etc.

[This Article Newly Inserted by Act No. 6176, Jan. 21, 2000]

Article 32-3 (Approval of Change of Controlling Shareholder, etc.)

(1) Any person desiring to be a controlling shareholder within the meaning of the PresidentialDecree by way of purchasing shares in a securities company shall meet the requirements by thePresidential Decree to promote sound management, among the requirements for a major investor underArticle 32(1)4 and 32(3), and obtain a prior approval from the Financial Supervisory Commission.

(2) The Financial Supervisory Commission may order that any shares purchased without the approvalin Article 32-3(1) be disposed within such a period of time not exceeding 6 months as set by theFinancial Supervisory Commission.

(3) Any person purchasing shares without the approval in Article 32-3(1) may not exercise itsvoting right in respect of such shares purchased without the approval.

(4) Detail requirements for the approval and order in Article 32-3(1) and 32-3(2) shall bedetermined by the Presidential Decree

[Newly inserted July 29, 2005]

SECTION 2 Maintenance of Sound Business Order

Article 33 (Eligibility of Officers)

(1) Deleted. <by Act No. 5736, Feb. 1, 1999>

(2) Any person who falls under any of the following subparagraphs shall not be an officer of asecurities company, and any officer of a securities company who falls under any of the followingsubparagraphs shall lose his office: <Amended by Act No. 5254, Jan. 13, 1997; Act No. 5423,

3. A person who has been sentenced to imprisonment without prison labor or a heavier punishment orto a fine or a heavier punishment under this Act, foreign Acts and subordinate statutescorresponding to this Act (hereinafter referred to as foreign securities Acts and subordinatestatutes) and other Acts and subordinate statutes which are related to finance (finance relatedActs and subordinate statutes) as prescribed by the Presidential Decree, and for whom 5 years havenot elapsed since the execution of such punishment was terminated (including the cases where theexecution is deemed to have been terminated) or exempted;

3-2. A person who has been sentenced to the suspension of execution of imprisonment without prisonlabor or a heavier punishment and is still in the suspended period of execution;

4. Any person who was an officer or an employee of a corporation or a company whose business licenseor authorization, etc. was cancelled pursuant to this Act, foreign securities Acts and subordinatestatutes, or finance-related Acts and subordinate statutes (limited to any person who is directlyor correspondingly responsible for the occurrence of the cause of cancellation and prescribed bythe Presidential Decree), and for whom 5 years have yet to elapse from the date on which suchlicense or authorization was canceled against the corporation or the company; and

5. A person who was discharged or dismissed from a securities company under this Act, foreignsecurities Acts and subordinate statutes, or finance-related Acts and subordinate statutes and forwhom 5 years have not elapsed since the date of such discharge or dismissal.

6. A retired officer or employee who is notified that he or she would have been demanded to bedischarged or dismissed from a securities company under this Act or finance-related Acts andsubordinate statutes if he or she had been in office and for whom 5 years have yet to elapse fromthe date of such notification (or, if the fifth anniversary of the date of notification is laterthan the seventh anniversary of the date of retirement or resignation, 7 years from the date ofretirement or resignation)

[This Article Wholly Amended by Act No. 3541, Mar. 29, 1982]

Articles 33-2 and 34

Deleted. <by Act No. 3945, Nov. 28, 1987>

Article 35 (Matters to be Authorized)

(1) When a securities company intends to merge with another company, transfer its whole business,or take over the whole business of another company (including equivalent cases), such securitiescompany shall obtain authorization from the Financial Supervisory Commission with respect thereto.In this case, the provisions of Article 32 shall apply mutatis mutandis. <Amended by Act No.5254, Jan. 13, 1997; Act No. 5539, May 25, 1998; Act No. 5736, Feb. 1, 1999; Act No. 5982, May 24,1999>

(2) The Financial Supervisory Commission shall, in determining whether to grant such authorizationunder the provisions of paragraph (1), take into account matters prescribed by the PresidentialDecree. <Newly Inserted by Act No. 6176, Jan. 21, 2000>

2. When a securities company establishes newly a branch office or other business office, or when itchanges the location of its principal office, branch office or other business office, or when itsuspends, resumes or discontinues the business of its principal office, branch office or otherbusiness office;

3. When a person and such relatives of him and other specially related persons of him as designatedby the Presidential Decree (hereinafter referred to as the specially related persons), whopossess the largest number of stocks of a securities company, are changed;

4. When a trade name of a securities company is changed;

4-2. When a cause to dissolve a securities company occurs; and

5. Cases as prescribed by the Presidential Decree, other than those under subparagraphs 1 through4-2.

Article 37 (Public Notice of Discontinuance of Securities Business)

When a securities company intends to discontinue its securities business or the business of itsbranch office or any other business office, the securities company shall print a public notice tothat effect in 2 or more daily newspapers 3 or more times not later than 30 days before the date ofdiscontinuance, and shall notify directly the creditors who are known to the securities company atthe same time. <Amended by Act No. 3541, Mar. 29, 1982>

Article 38

Deleted. <by Act No. 4469, Dec. 31, 1991>

Article 39

Deleted. <by Act No. 5423, Dec. 13, 1997>

Article 40

Deleted. <by Act No. 6623, Jan. 26, 2002>

Article 41 (Liabilities for Branch Office or Other Business Office)

If a branch office or other business office of any securities company causes any damage to

other persons in connection with the purchase and sale of securities or other securitiestransaction, such securities company shall be liable to compensate the damage to the person whosuffers the damage.

Article 42 (Restrictions on Officers Securities Transaction)

No officer or employee of any securities company shall make or entrust sale and purchasetransactions of securities for his own account in whatsoever name except for securities savingsthrough payroll deduction plans and for other cases as prescribed by the Presidential Decree.

Article 43 (Manifestation of Type of Transaction)

When any securities company receives an order from any customer for a securities transaction, suchsecurities company shall make clear in advance to such customer as to whether it will act as theother party, or as an intermediary, an agent, or a factor in effectuating such transaction.

Article 44 (Prohibition of Representation of Other Party)

No securities company may act as a principal and concurrently as a factor, an intermediary or anagent for other party with respect to the same securities transaction.

Article 44-2

Deleted. <by Act No. 6423, Mar. 28, 2001>

Article 44-3 (Separate Deposit of Customer Deposit Money)

(1) Any securities company shall deposit (including trust; hereinafter the same shall apply) anymoney deposited by customers (referring to the money deposited by customers in connection with saleand purchase and any other transactions of securities; hereinafter the same shall apply) separatelyfrom his property at a securities finance company (hereinafter referred to as a

(2) Where a securities company deposits customer deposit money in a depository institution pursuantto paragraph (1), it shall specify that the money is the customers property.

(3) A securities company which has received customer deposit money (hereinafter referred to as adepositing securities company) pursuant to paragraph (1) shall not transfer or offer as securitycustomer deposit money deposited in a depository institution except as otherwise determined by thePresidential Decree, and no person shall set off or seize it (including provisional seizure).

(4) A depositing securities company shall, where it falls under any of the following subparagraphs,withdraw customer deposit money deposited in a depository institution and preferentially pay it tocustomers. In this case, the securities company concerned shall publicly announce payment time andplace of customer deposit money and other matters relating to the payment of customer deposit moneyin two daily newspapers or more within the period as determined by the Presidential Decree:

1. Where it resolves to discontinue its business;

2. Where it receives an order for suspension of business;

3. Where it has its license revoked;

4. Where it resolves to dissolve itself;

5. Where it has been declared bankrupt; and

6. Where any cause equivalent to those listed in subparagraphs 1 through 5 occurs.

(5) A depository institution, where it falls under any subparagraph of paragraph (4), shallpreferentially pay customer deposit money deposited to the depositing securities company.

(6) A depository institution shall manage customer deposit money by the following methods:

1. Purchase of Government bonds and municipal bonds;

2. Purchase of bonds whose payment is guaranteed by the Government, local governments or financialinstitutions; and

3. Other methods recognized as being capable of safely managing customer deposit money, asdetermined by the Presidential Decree.

(7) The scope of customer deposit money to be deposited by a securities company in a depositoryinstitution pursuant to paragraph (1), the ratio to be deposited, matters relating to withdrawal ofcustomer deposit money, matters on the management of customer deposit money by a depositoryinstitution or other matters necessary for the depositing of customer deposit money shall bedetermined by the Presidential decree. In this case, the ratio to be deposited may be otherwisedetermined by securities company taking into account the securities companys financial status,etc.

[This Article Newly Inserted by Act No. 5736, Feb. 1, 1999]

Article 44-4 (Depositing of Securities, etc. Deposited by Customers)

(1) A securities company shall promptly deposit securities which come to be held by customers dueto buying and selling consignment or other transactions and bonds or deeds as determined by thePresidential Decree in the Korea Securities Depository established under Article 173 (hereafter inthis Article, referred to as the Korea Securities Depository). <Amended Jan. 29, 2004>

(2) A securities company shall promptly deposit securities, bonds, and deeds to be held by managingassets on hand as determined by the Presidential Decree in the Korea Securities Depository.<Amended Jan. 29, 2004>

[This Article Newly Inserted by Act No. 5736, Feb. 1, 1999]

Article 45

Deleted. <by Act No. 5736, Feb. 1, 1999>

Article 46 (Notification of Sale and Purchase Transactions, etc.)

A securities company shall notify the customer concerned of the purchase and sale by a customersorder and other contents of transactions, etc. under the conditions as prescribed by thePresidential Decree.

[This Article Wholly Amended by Act No. 5254, Jan. 13, 1997]

Article 46-2 (Exceptional Acquisition of Treasury Stocks)

A securities company may, in case where the securities company has been entrusted by a customer,acquire treasury stocks less than the minimum trading unit of the securities market or KOSDAQoutside those markets. In this case, the acquired treasury stocks shall be disposed of within theperiod as prescribed by the Presidential Decree. <Amended Jan. 29, 2004>

[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 47 (Business Report)

(1) Any securities company shall compile each business report stating its business achievements,financial standing, and other matters prescribed by the Presidential Decree for 3 months, 6 months,9 months and 12 months, respectively, from the date of the commencement of every business year andfile such business report with the Financial Supervisory Commission within forty-five days from thedate of the elapse of such months. <Amended by Act No. 6623, Jan. 26, 2002>

(2) Any securities company shall keep the business report referred to in paragraph (1) or itscomputerized materials at its head office, branch office, or other business office and make themaccessible to the public for one year from the date on which the business report is filed with theFinancial Supervisory Commission. <Amended by Act No. 6623, Jan. 26, 2002>

(3) Detailed matters concerning the compilation of the business report under the provisions ofparagraph (1) and other necessary matters shall be determined by the Financial SupervisoryCommission.

[This Article Wholly Amended by Act No. 6176, Jan. 21, 2000]

Article 48 (Officers Engaging in Other Business)

Where the Presidential Decree determines that the interests of a fulltime officer of a securitiescompany are in conflict with those of customers or threaten to impair the sound management of thesecurities company, the officer shall not be engaged in the regular business of another corporationor in other businesses. <Amended by Act No. 6176, Jan. 21, 2000; Act No. 6423, Mar. 28, 2001>[This Article Wholly Amended by Act No. 5736, Feb. 1, 1999]

Article 49 (Credit Extension)

(1) Any securities company may extend credit in connection with securities as lending money orsecurities to a customer.

(4) In case where a securities company sells such securities as underwritten thereby, thesecurities company shall not lend funds or extend any other credit with respect to the purchase ofsuch securities, until 3 months have elapsed from the date of underwriting such securities.

Article 50 (Business of Securities Savings)

(1) A securities company may be engaged in the business of securities savings according to the

(2) The method and the contents of the securities savings business referred to in paragraph (1)shall be prescribed by the Presidential Decree. <Amended by Act No. 5254, Jan. 13, 1997; Act No.5539, May 25, 1998; Act No. 6176, Jan. 21, 2000>

Article 51 (Restrictions on Engaging Concurrently in Other Business)

(1) Any securities company shall be prohibited from engaging in any other business than thesecurities business falling under each of the following subparagraphs:

1. The financial business (referring to the business prescribed by this Act or finance-related Actsand subordinate statutes; hereafter the same in this Article shall apply) that is prescribed byrelevant Acts and subordinate statutes as the business for securities companies to run;

2. The financial business prescribed by the Presidential Decree, which is authorized by theFinancial Supervisory Commission as the business for securities company to run; and

3. The business falling under any of the following items, which is prescribed by the PresidentialDecree as a collateral business:

(a) The business related to the securities business;

(b) The business of utilizing manpower, assets, or facilities and equipment, etc. owned by asecurities company; and

(c) The business that does not require any license, authorization, approval or registration, etc.under other Acts and subordinate statutes.

(2) Any financial business under the provisions of paragraph (1) 2 for which a securities companyhas obtained a license or authorization from the Financial Supervisory Commission or filed aregistration with the Financial Supervisory Commission in accordance with this Act or other Actsand subordinate statutes shall be deemed to have been granted authorization by the

1. To solicit sale and purchase transaction of securities by promising a customer to assume all or apart of the loss incurred as a result of the transaction concerned;

2. To provide, directly or indirectly, any benefit which has a property value with a customer inrelation to the underwriting business of securities for the purpose of excluding competitors andinducing the customers, or to restrict business activities of customers by making improper use ofits superior position in transactions; and

3. To do such acts relating to issuance, purchase and sale or other transaction of securities otherthan those referred to in subparagraphs 1 and 2 as prescribed by the Presidential Decree as thosedetrimental to the protection of investors or the fair transactions, or undermining the credibilityof the securities industry.

Article 52-2 (Business Method of Securities Company Making Use of Electronic Data-ProcessingEquipment, etc., and Restrictions Thereon)

(1) Any securities company that runs the securities business prescribed in Article 2 (8) 8 shallmake business matters falling under each of the following subparagraphs conform to the standardsprescribed by the Presidential Decree:

1. Matters concerning securities subject to the brokering of sale and purchase transactions;

2. Matters concerning the suspension of sale and purchase of securities subject to the brokering

of sale and purchase transactions and the removal of such suspension;

3. Matters concerning the conclusion of a sale and purchase transaction contract and other mattersconcerning settlement method and settlement responsibility, etc.;

4. Matters concerning sale and purchase transactions of securities on consignment, including theconsignment guarantee money, etc. of a securities company participating in such transactions;

5. Matters concerning the publication of issuers of securities subject to the brokering of sale andpurchase transactions;

6. Matters concerning the publication and report of the results of sale and purchase transactions;

7. Matters concerning the opening, closing, suspension, or interruption of the brokering of sale andpurchase transactions; and

8. Other necessary matters in connection with the brokering of sale and purchase transactions.

(2) Any securities company that only runs the securities business as prescribed n Article 2 (8) 8shall be prohibited from running the business prescribed in Articles 49 and 50 and any subparagraphof 51 (1).

(3) Any securities company that runs the securities business as prescribed in Article 2 (8) 8shall, if such securities subject to the brokering of sale and purchase transactions are listedstocks or stocks listed on KOSDAQ, be a member of either the Korea Exchange. <Amended Jan. 29,2004>

(4) The provisions of Article 117 shall apply mutatis mutandis to any securities company that runsthe securities business as prescribed in Article 2 (8) 8.

(5) The provisions of Articles 43, 44, and 46 shall not apply to a case where any securitiescompany runs the securities business as prescribed in Article 2 (8) 8. <Amended by Act No. 6623,Jan. 26, 2002>

[This Article Newly Inserted by Act No. 6423, Mar. 28, 2001]

Article 52-3 (Prohibition of Arbitrary Purchase and Sale)

Officers and employees of a securities company shall not, unless they have received entrustmentwith respect to purchase and sale transactions of securities from a customer or his agent, makepurchase and sale transactions of securities with property deposited by customers.[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

No person shall unfairly receive money, service and other financial interests from a securitiescompany or officers and employees thereof in return for the payment of a commission relating to thebusiness which a securities company operates, or may request a securities company or officers andemployees thereof to furnish the person himself or third party with money, service and otherfinancial interests.

[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 53 (Inspection)

(1) A securities company shall be subject to inspection by the Governor of the FinancialSupervisory Service (hereinafter referred to as the FSS Governor) with respect to its businesscondition and property. <Amended by Act No. 5498, Jan. 8, 1998>

(2) The FSS Governor may, if necessary for the inspection, request any securities company to reporton its business conditions or property, to file data, to make witness available, or to present anyevidence or opinion thereon. <Amended by Act No. 5498, Jan. 8, 1998>

(3) Any person who conducts inspection pursuant to the provisions of paragraph (1) shall show thepersons concerned a certificate which represents his authority to inspect.

(4) The FSS Governor shall, after the inspection referred to in paragraph (1), file a report on theresults of the inspection with the Financial Supervisory Commission. In this case, if the FSSGovernor finds that any securities company has violated the provisions of this Act, other Acts

and subordinate statutes relating to securities, any disposition taken under this Act, or theregulations of the Financial Supervisory Commission, the Securities Futures Commission under theAct on the Establishment, etc. of Financial Supervisory Organizations (hereinafter referred to asthe Securities Futures Commission), and the Korea Exchange, the FSS Governor shall add thewritten opinion as to how to take actions against such violations. <Amended by Act No. 5498,Jan. 8, 1998; Jan. 19, 2004>

1. Where any securities company falls under any subparagraph of Article 55 (1), the cancellation ofthe securities business license of the securities company concerned; and

2. Where any securities company has, in the course of its business, committed unlawful or unfairacts other than those referred to in subparagraph 1, the order to suspend the business in whole orin part, request for the discharge of officers concerned or dismissal of employees concerned, orother measures as prescribed by the Presidential Decree.

(6) The FSS Governor may, if necessary, entrust part of the inspection authority as referred to inparagraph (1) to the Korea Securities Dealers Association (hereinafter referred to as theAssociation) established under Article 162 under the conditions as prescribed by the PresidentialDecree. <Newly Inserted by Act No. 6623, Jan. 26, 2002; Jan. 29, 2004>

3. Improvements in management and activities of the securities company;

4. Publication by the securities company;

5. Maintenance of order in business within the meaning of Article 28(2)-3;

6. Method of business within the meaning of Article 28(2)-4; or

7. Reports, filings or other matters determined by the Presidential Decree as required thesupervision in the conduct of securities business.

[Wholly amended Dec. 29, 2005]

Article 54-2 (Maintenance of Equity Capital Regulation Rate)

(1) Any securities company shall maintain the rate (hereinafter referred to as the equity capitalregulation rate) higher than the rate prescribed by the Presidential Decree, which derives fromthe division of the amount calculated by deducting the amount of the following subparagraph 3 fromthe added amount of the following subparagraphs 1 and 2 by total risk amount (referring to theamount added up with the risks calculated in terms of money, which is involved in the business oris immanent in assets and debts of such securities company):

1. The amount obtained by deducting total amount of debts from total value of assets;

2. The allowance account for bad debts established in the floating asset, the posterity borrowings,and the amount prescribed by the Presidential Decree; and

3. The appraised value of fixed assets, the amount of prepayment, and the amount prescribed by thePresidential Decree.

(2) Any securities company shall calculate its equity capital regulation rate as of the last day ofevery quarter (hereafter in this Article referred to as the base day) and file a report thereofwith the Financial Supervisory Commission within forty-five days from the base day and keep suchreport or its computerized materials at its head office, branch office and other business office tomake it accessible to the public for three months from the date forty-five days have passed

(1) Any securities company shall be prohibited from performing the act falling under each of thefollowing subparagraphs except as otherwise provided for by the Presidential Decree: <Amended byAct No. 6423, Mar. 28, 2001>

1. The act of owning securities issued by the biggest stockholder (referring to the biggeststockholder under the provisions of Article 54-5 (4) 2; hereafter in this paragraph the same shallapply) or the major stockholder (referring to the major stockholder under the provisions of Article188 (1); hereafter in this paragraph the same shall apply) of a relevant securities company;

2. The act of loaning money or extending credit to the person falling under each of the followingitems:

(a) The biggest stockholder of the relevant company (including persons prescribed by thePresidential Decree from persons specially related to him; hereafter in this paragraph the sameshall apply);

(b) The major stockholder of the relevant company; and

(c) The officers of the relevant company and specially related persons who are prescribed by thePresidential Decree;

3. The act of directly or indirectly guaranteeing the repayment of debts for other persons;

4. The act of owning stocks, bonds or commercial papers (referring to bills issued by the businessfor the purpose of raising funds) issued by the largest shareholder or the major shareholder of arelevant securities company; and

5. Any act that may harm the sound management of assets of a securities company as prescribed by thePresidential Decree other than acts in subparagraphs 1 through 4.

(2) The Financial Supervisory Commission may set detailed standards necessary to execute thematters under paragraph (1).

[This Article Newly Inserted by Act No. 6176, Jan. 21, 2000]

Article 54-4 (Internal Control Standards)

(1) Any securities company shall make basic procedures and standards (hereafter in this Articlereferred to as the internal control standards) to be followed by its officers and employees whenthey perform their duties in order to observe Acts and subordinate statutes, operate its assets ina sound manner and protect customers.

(2) Any securities company shall have not less than one person assigned to check whether theinternal control standards are observed and to inspect any violation of the internal controlstandards and report the results to the auditor or the inspection committee (hereinafter referredto as the compliance officer).

(3) Any securities company shall, if it intends to appoint or dismiss a compliance officer, gothrough a resolution thereon of the board of directors: Provided, That the same shall not apply toany branch office of a foreign securities business operator. <Newly Inserted by Act No. 6423,Mar. 28, 2001>

1. He is required to be the person with the experience falling under any of the following items:

(a) A person who has served not less than 10 years in the Bank of Korea or an institution subjectto inspection (including any foreign financial institution corresponding thereto) under Article 38of the Act on the Establishment, etc. of Financial Supervisory Organizations;

(b) A person with a masters degree or higher in the finance-related area who has served not lessthan 5 years in a university as a full-time lecturer or higher or in a research institute as aresearcher or higher;

(c) A person with the qualification of an attorney-at-law or a certified public accountant who hasserved not less than 5 years in the service area related to such qualification; and

(d) A person who has served not less than 5 years in the Ministry of Finance and Economy, theFinancial Supervisory Commission, the Securities Futures Commission, or the Financial SupervisoryService and for whom 5 years have yet to elapse from the date on which he resigned or retired fromeach of such institutions;

2. He is required not to fall under each subparagraph of Article 33 (2); and

3. He is required not to have been subject to measures such as demand for caution or warning, etc.for violating finance-related Acts and subordinate statutes from the Financial SupervisoryCommission or the Governor of the Financial Supervisory Service in the past 5 years.

(1) Any securities company (limited to any securities company prescribed by the Presidential Decreein the light of the size of its asset, etc.) shall have the board of directors in which the numberof outside directors is not less than half of total number of directors of the company. In thiscase, not less than three outside directors shall be seated in the board of directors.

(2) Any securities company under the provisions of paragraph (1) shall establish a committee inaccordance with the provisions of Article 393-2 of the Commercial Act to recommend candidates foroutside directors (hereafter in this Article referred to as the outside director candidaterecommendation committee). In this case, outside directors shall make up not less than half of thetotal members of the outside director candidate recommendation committee.

(3) In case of the securities company under the provisions of paragraph (1), a general meeting ofstockholders of the securities company, when it intends to appoint its outside directors, shallappoint them from among candidates recommended by the outside director candidate recommendationcommittee. In this case, when the outside director candidate recommendation committee of asecurities company, which is a stock-listed corporation or a KOSDAQ registered corporation,recommends candidates for outside directors, it shall include therein candidates for outsidedirectors recommended by the stockholders who satisfy the requirements for exercising rights underArticle 191-14. <Amended by Act No. 6423, Mar. 28, 2001; Jan. 29, 2004>

(4) Any person falling under any of the following subparagraphs shall be prohibited from becomingan outside director of a securities company under the provisions of paragraph (1) and shall bedismissed from the office of an outside director when he is found to fall under any of thefollowing subparagraphs after appointed as the outside director:

1. A person who falls under Article 191-12 (3) 1 through 4;

2. In case that a person who is a stockholder of a relevant securities company and another person ina special relationship with him hold the largest number of stocks on the basis of total number ofissued voting stocks of the company, the former (hereinafter referred to as the biggeststockholder);

3. A person in a special relationship with the biggest stockholder;

4. The major stockholder of a relevant securities company (referring to the major stockholder underthe provisions of Article 188 (1)) and his spouse and lineal ascendants and descendants;

5. A person who is an officer or employee (referring to a person who is engaged in a regularbusiness; hereafter the same in this paragraph shall apply) of a relevant securities company or itsaffiliate (referring to the affiliate under the Monopoly Regulation and Fair Trade Act) or workedas an officer or employee for such relevant securities company or its affiliate within thepreceding two years;

6. The spouse or lineal ascendants or descendants of an officer of a relevant securities company;

7. The officer or employee of a corporation that is in an important business relationship prescribedby the Presidential Decree with a relevant securities company, a competitive relationship or acooperative relationship with such securities company or the person who worked as the officer oremployee for such corporation within the preceding two years;

8. The officer or employee of a company in which the officer or employee of a relevant securitiescompany works as a non-standing director; and

9. A person who has difficulty in faithfully performing his duties as an outside director or mayaffect adversely the management of his company and is prescribed by the Presidential Decree.

(5) The securities company under the provisions of paragraph (1), when the number of its outsidedirectors does not meet the requirements for the composition of the board of directors underparagraph (1) owing to any resignation or death, etc. of the outside directors, shall make surethat it satisfies the requirements of paragraph (1) at a general meeting of stockholder called forthe first time after the occurrence of such cause.

[This Article Newly Inserted by Act No. 6176, Jan. 21, 2000]

Article 54-6 (Inspection Committee)

(1) Any securities company (limited to the securities company prescribed by the Presidential Decreetaking into account the size of its asset, etc.) shall establish an inspection committee(hereinafter referred to the inspection committee) pursuant to the provisions of Article 415-2 ofthe Commercial Act.

1. Not less than 2/3 of the total members are required to be outside directors;

2. Not less than one member from among the members are required to be accounting or financialspecialists prescribed by the Presidential Decree; or

3. The representative of the inspection committee of any securities company that is either a

stock-listed corporation or a KOSDAQ registered corporation is required to be an outside director.

(3) Any members of the inspection committee who are not outside directors shall not fall under anysubparagraph of Article 191-12 (3): Provided, That any person who holds office not as a full-timeauditor or an outside director of the inspection committee under the provisions of Article 191-12(3) but as a member of the inspection committee may become a non-outside-director member of theinspection committee notwithstanding the provisions of Article 191-12 (3) 6.

(4) Where the securities company referred to in paragraph (1) is unable to fill the fixed number ofoutside directors of the inspection committee under paragraph (2) due to such causes as theresignation and death, etc. of outside directors, a general meeting of stockholders called for thefirst time after the occurrence of such causes shall have the requirement of paragraph (2)satisfied.

(5) The proviso of Article 415-2 (2) of the Commercial Act shall not apply to the composition ofthe inspection committee under the provisions of paragraph (1).

(6) The provisions of Article 409 (2) and (3) of the Commercial Act shall apply mutatis mutandis tothe selection and appointment of any outside director who becomes a member of the inspectioncommittee. <Newly Inserted by Act No. 6423, Mar. 28, 2001>

1. Where a securities company obtains the license of securities business by fraud or unfair means;

2. Where a securities company commits a violation of licensed contents or licensed terms or fails tocommence the business within 6 months from the date on which a license was granted;

3. Where a securities company has received money or securities from other person in connection withits business by unfair means, or when it has acquired money or securities which shall be deliveredto other persons;

4. Where a securities company having received the order to suspend its business pursuant to theprovisions of Article 57 has not corrected the reason therefor within 1 month (where a period tocorrect exceeding one month is determined in ordering to suspend its business, within the period)from the date on which such securities company has received such order;

5. Where a securities company violates any contract in connection with purchase and sale or othertransactions effected on the securities market or KOSDAQ, or when it does not conduct delivery withrespect to such purchase and sale or other transactions;

6. Where a securities company commits a violation of the provisions of Articles 35 (1), 54-2 (1),54-3, 54-5, 54-6 or 63;

7. Where a securities company violates the order issued pursuant to the provisions of Article 54;and

8. Where a securities company violates this Act, order or disposition given under this Act otherthan subparagraphs 1 through 7, and therefore it is deemed difficult for it to do business as asecurities company.

(2) Any securities company shall, when its securities business license is canceled, dissolveitself. <Newly Inserted by Act No. 6176, Jan. 21, 2000>

When a securities company is cancelled its license (including the cancellation of a license under

Article 14 of the Act on the Structural Improvement of the Financial Industry) pursuant to Article55 or closes its business by itself, it shall consummate the purchase and sale of securities andother transactions which it has left unsettled. In this case, the securities company or thesuccessor of such securities company shall be regarded as a securities company to the extentconsistent with the purpose of consummating such unsettled purchase and sale of securities or othertransactions. <Amended by Act No. 5736, Feb. 1, 1999>

1. Where it violates the provisions of Article 42, 44, 44-3, 44-4, 47, 49 through 52, 52-2, or 54-4;

2. Where it violates an order under Article 54;

3. Where it is involved in the act of unfair trade in violation of the provisions of Article 188(1), 188-2 (1) or 188-4;

4. Where it fails to comply with a request to discharge an officer referred to in paragraph (3) orArticle 53 (5) 2 without any justifiable cause; and

5. Where it resolves to discontinue its business or dissolve itself in order to protect publicinterests and investors.

(2) The provisions of Article 56 shall apply mutatis mutandis to the suspension of businessreferred to in paragraph (1).

(3) In case where any securities company violates the provisions of Article 36, 43, 44, 46 or 48,or any of officers violates the provisions of Article 52, the Financial Supervisory Commission mayrequest such securities company to discharge the officer concerned after showing the

(1) If a retired officer or employee would have been subject to certain measure falling underArticle 53(5)-2 if he or she had been in office, the Financial Supervisory Commission may cause theFSS Governor to give notice of such measure to the head of the securities company.

(2) The head of securities company who received the notice in Article 57-2(1) shall relayed thenotice to the relevant officer or employee and keep the record of the notice.[Newly inserted Dec. 29, 2005]

Article 58 (Liabilities of Officers)

(1) In case where any director or auditor (referring to the members of the inspection committee ifsuch committee is established; hereafter the same in this Article shall apply) of a securitiescompany neglects to perform his duties on purpose or by negligence, or causes any damage to thirdperson in the course of performing his duties for such securities company, such director or auditorand the biggest stockholder shall be jointly and severally made liable to compensate for thedamage: Provided, That the same shall not apply to the biggest stockholder who proves that the actcausing such damage to third person is not committed upon his request or with his consent.<Amended by Act No. 3541, Mar. 29, 1982; Act No. 6176, Jan. 21, 2000>

(2) The provisions of paragraph (1) shall not affect the liabilities of the securities companyconcerned.

(1) Unless any officer or employee of a securities company receives a written request or a writtenconsent from the customer who makes or intends to make purchase and sale of securities through thesecurities company (including any person who participates in the securities savings referred to inArticle 50; hereinafter the same shall apply), the officer or the employee of such securitiescompany shall not offer or divulge the information with respect to the customer, such as purchaseand sale of securities and other securities transaction, and the money or securities deposited bysuch customer, to another person: Provided, That the same shall not apply to case where thesecurities company is inspected by a supervisory institution with respect to its duties or where itis requested pursuant to the provisions of Article 60.

(2) Any person who acquires the information in the ordinary course of inspection by a supervisoryinstitution shall not offer or divulge such information to any other person, or make use of theinformation for any other purpose other than that of the inspection.

Article 60 (Prohibition of Request for Information)

(1) No person shall request any officer or employee of a securities company to offer theinformation referred to in Article 59 (1), except when a court issues an order to submit suchinformation or a judge of a court issues a warrant therefor, or other cases as prescribed by thePresidential Decree.

(2) Even when the offer of such information is requested pursuant to the provisions of paragraph(1), the inquiry or investigation shall be limited within the necessary scope of the purpose.

Article 61 (Refusal of Illegal Investigation)

Any officer or employee of a securities company shall, by and after showing the reason therefor,refuse the request, inquiry or investigation which is in contravention of the provisions of Article60.

Article 62 (Trade Name)

(1) Any securities company shall use the letters of securities, securities brokerage, or bondsbrokerage in its trade name under the conditions as prescribed by the Presidential Decree.<Amended by Act No. 6423, Mar. 28, 2001>

(2) No person who is not a securities company shall include any word which represents a securitiesbusiness in its trade name.

Article 63 (Prohibition of Lending Trade Name)

No securities company shall allow other persons to operate the securities business by lending itstrade name.

(1) The provisions of Article 191-13 (1) through (6) shall apply mutatis mutandis to therequirements, etc. for the exercise of the minority stockholders right of a securities company(limited to any securities company prescribed by the Presidential Decree taking into account thesize, etc. of its asset; hereafter the same in this Article shall apply). In this case, 1/10,000or more in Article 191-13 (1) shall be deemed 5/100,000 or more; 50/100,000 or more (25/100,000or more in case of a corporation prescribed by the Presidential Decree) in paragraph (2) of thesame Article, 250/100,000 or more (125/1,000,000 or more in case of a corporation prescribed bythe Presidential Decree); 10/10,000 or more (5/10,000 or more in case of a corporation prescribedby the Presidential Decree) in paragraph (3) of the same Article, 50/100,000 or more (25/100,000or more in case of a corporation prescribed by the Presidential Decree); 50/10,000 or more(25/10,000 or more in case of a corporation prescribed by the Presidential Decree) in paragraph(4) of the same Article, 250/100,000 or more (125/100,000 or more in case of a corporationprescribed by the Presidential Decree); and 30/1,000 or more (15/1,000 or more in case of acorporation prescribed by the Presidential Decree) in paragraph (5) of the same Article,150/10,000 or more (75/10,000 or more in case of a corporation prescribed by the PresidentialDecree), respectively. <Amended by Act No. 6423, Mar. 28, 2001>

(2) The provisions of Article 191-14 (1) and (2) shall apply mutatis mutandis to the requirement,etc. for the exercise of the right by stockholders of a securities company to make proposals. Inthis case, 10/1,000 or more (5/1,000 or more in case of a corporation prescribed by thePresidential Decree) in Article 191-14 (1) shall be deemed 50/10,000 or more (25/10,000 or morein case of a corporation prescribed by the Presidential Decree).[This Article Newly Inserted by Act No. 6176, Jan. 21, 2000]

(1) No person other than members of the Korea Exchange shall perform sale and purchase transactionson the securities market (for the purpose of this Section, including KOSDAQ): Provided, That wherethe membership regulations under Article 16 of the Korea Exchange Act determine that such personmay sell and buy specific securities, he may do so.

(2) A person who has been able to perform sale and purchase transactions on the securities marketunder the proviso of paragraph (1) shall be deemed a member of the Korea Exchange in applying theprovisions of Articles 87, 94(2)-5, 95 through 97, 99, 100, and 206-3(6) hereof and Article 6,Subparagraph 6, and Articles 16 and 19.[This Article Wholly Amended Jan. 29, 2004]

Article 86

Deleted. <by Act No. 5736, Feb. 1, 1999>

Article 87 (Completion of Transactions)

(1) When a member is suspended from transactions or loses his qualification, the Korea Exchangeshall have the member or any other member complete the sale and purchase transactions which havebeen initiated on the securities market by the member. In this case, the member who loses hisqualification shall be regarded as having the qualification of a member within the objective ofcompletion of those transactions. <Amended by Act No. 3945, Nov. 28, 1987; Jan. 29, 2004>

(2) In case where the Korea Exchange has any other member complete the sale and purchasetransactions pursuant to paragraph (1), it shall be regarded that a trust contract is in existence

between the member concerned and such other member. <Amended by Act No. 3945, Nov. 28, 1987;Jan. 29, 2004>

Article 88 (Listing Regulations)

(1) Deleted. <by Act No. 5254, Jan. 13, 1997>

(2) The Korea Exchange shall adopt the Securities Listing Regulations (hereinafter referred to asthe Listing Regulations) in order to examine securities which are to be listed on the securitiesmarket or administer the securities which have been listed on the securities market (hereinafterreferred to as listed securities). In such case, there shall be separate Listing Regulationsapplicable to KOSDAQ. <Amended by Act No. 5736, Feb. 1, 1999; Jan. 29, 2004>

(3) The Listing Regulations referred to in paragraph (2) shall provide for the following matters:<Amended by Act No. 5736, Feb. 1, 1999>

2. Matters relating to suspension from and release of suspension from the sale and purchasetransactions of securities; and

3. Matters necessary for the administration of listed securities other than those prescribed insubparagraphs 1 and 2 of this paragraph.

Article 89 (Disclosure Regulations)

(1) The Korea Exchange shall adopt the Listed Corporation Disclosure Regulations (hereinafterreferred to as the Disclosure Regulations) in order to disclose the financial standing andbusiness activity of stock-listed corporations and KOSDAQ registered corporations and conduct thesupervision of stock-listed corporations and KOSDAQ registered corporations. <Amended Jan. 29,2004>

(2) The Disclosure Regulations under paragraph (1) shall include the following matters. In thiscase, the matters provided in subparagraphs 1 and 2 shall meet the provisions of Article 186<Amended Jan. 29, 2004>:

1. Matters relating to the information on which a stock-listed corporation (for the purpose of thisArticle, including KOSDAQ registered corporations) is to make a report or a disclosure;

2. Matters relating to the methods and procedures which a stock-listed corporation is to follow inmaking a report or disclosure;

3. Matters relating to the standards for deciding upon whether or not a stock-listed corporationfollows the provisions of subparagraphs 1 and 2 and to the measures for a securities companyagainst such provisions;

4. Matters relating to the supervision of stock-listed corporations, such as the suspension of theirsale and purchase transactions; and

(1) Matters relating to the sale and purchase transactions of securities on the securities marketshall be determined by the operating rules of the Korea Exchange. In this case, matters relating toKOSDAQ may be determined by separate operating rules <Amended Jan. 29, 2004>.

(1) Members shall set aside a joint compensation fund for damage incurred from contraventions ofcontracts (hereinafter referred to as the compensation fund) in the Korea Exchange in order tocompensate for the damage incurred from any contravention of trading contracts on the securitiesmarket: Provided, That the same shall not apply to any member, etc. prescribed by the KoreaExchange, who does not bear the responsibility for executing the settlement of sale and purchasetransactions. <Amended by Act No. 3945, Nov. 28, 1987; Act No. 6423, Mar. 28, 2001; Jan. 29,2004>

(2) Any member (excluding the member referred to in the proviso of paragraph (1)) shall, within theextent of the compensation fund referred to in paragraph (1), be liable jointly and severally forthe damage incurred from any contravention of trading contract on the securities market.

<Amended by Act No. 3945, Nov. 28, 1987; Act No. 6423, Mar. 28, 2001>

(3) The rate and limit of reserve, use, management, repayment of the compensation fund referred toin paragraph (1), and other necessary matters relating to the operation of the compensation fundshall be prescribed by the Presidential Decree.

If a member has not fulfilled his obligation based on sale and purchase transactions on thesecurities market for the Korea Exchange or other members, the Korea Exchange may appropriate themembers deposit and guarantee fund for the payment of that obligation. <Amended by Act No.3945, Nov. 28, 1987; Jan. 29, 2004>

(2) In case where the Korea Exchange compensates for the damage under paragraph (1), thecompensation fund set aside under the provisions of Article 95 shall be appropriated in preference.<Amended Jan. 29, 2004>

(3) In case where the Korea Exchange compensates for the damage under paragraphs (1) and (2), theKorea Exchange shall be entitled to the right to indemnification for the compensated amount and allexpenses required to do so against the member who contravened the trading contract. <Amended byAct No. 3945, Nov. 28, 1987; Jan. 29, 2004>

(4) The amount of money collected in accordance with paragraph (3) shall be, in preference,appropriated for such amount as the Korea Exchange has compensated with its own money and allexpenses required to do so, and the remainder shall be reserved in the compensation fund.<Amended Jan. 29, 2004>

(5) Matters with respect to the exercise of the right to indemnification referred to in paragraph(3) shall be prescribed by the Presidential Decree.

(1) The Korea Exchange shall have a right to be paid in preference to any other creditors withrespect to the deposit, members guarantee fund and money or securities paid for the delivery andsettlement. <Amended Jan. 29, 2004>

(2) When a member, in case where the Korea Exchange delivers securities to the member prior to thesettlement, causes any damage to the Korea Exchange due to the unfulfillment of delivery orsettlement by such member, the Korea Exchange shall have a right to be paid in preference to anyother creditors with respect to property of such member: Provided, That the right shall not be inpreference to obligations hypothecated by chonsegwon (right of registered lease on deposit basis),pledges or mortgage created prior to the arrival of settlement date. <Amended by Act No. 3945,Nov. 28, 1987; Jan. 29, 2004>

Article 100 (Preferential Right of Entruster Due to Contravention of Contract by Entrustee andRight of Korea Exchange in Preference to Entruster) <Amended Jan. 29, 2004>

(1) Any person who entrusts the sale and purchase transactions on the securities market to a membershall, in case where the member entrusted with the transactions contravenes the entrustmentcontract, have a right to satisfy the claim based upon such contravention in preference to anyother creditors with respect to the deposit and members guarantee fund. <Amended by Act No.3945, Nov. 28, 1987>

(2) The preferential right referred to in Article 99 shall be in preference to such preferentialright

as prescribed by the provisions of paragraph (1).

Article 101 (Prohibition of Sale and Purchase in Contravention of Contract)

Any securities company which has been entrusted with the sale and purchase transactions on thesecurities market, shall have such transactions made only through the securities market withoutfail. In this case, the provisions of Article 44 shall not apply. <Amended by Act No. 3945, Nov.28, 1987; Act No. 4469, Dec. 31, 1991>

Article 102

Deleted. <by Act No. 5254, Jan. 13, 1997>

Article 103 (Publication of Quotations)

The Korea Exchange shall, under the conditions as prescribed by the Presidential Decree, makepublic the quotations showing the daily trading volume, daily settled price, and the highest,lowest and closing prices of the securities on the securities market. <Amended by Act No. 3541,Mar. 29, 1982;Jan. 29, 2004>

(1) If a securities company is entrusted by a customer to make a sale and purchase transaction ofsecurities, the securities company may carry out such transaction under a discretionary

decision only on the quantity, price and time of the transaction. In this case, the types and itemsof securities, the categories and methods of the transaction shall be determined only according toa decision of the customer. <Amended by Act No. 4469, Dec. 31, 1991>

(2) The securities company, entrusted by the customer to make such sale and purchase transaction ofsecurities in accordance with Article 107(1) (Discretionary Sale and Purchase), shall fulfill itsduty of care as good manager and shall not <newly inserted Jan. 29, 2004>:

1. Solicit for or be entrusted to do a Discretionary Sale and Purchase contrary to theprinciple of investment based on customers own judgment and liability;

2. Effect too frequent Discretionary Sale and Purchases comparatively with the purpose ofentrustment and the volume of monies or securities entrusted; or

3. Use a Discretionary Sale and Purchase in the interest of itself or a third party.

(2) A securities company may be entrusted with the sale and purchase transactions of securities bymeans of electronic communication and other manners as prescribed by the Presidential Decree.[This Article Wholly Amended by Act No. 5254, Jan. 13, 1997]

Articles 110 and 111

Deleted. <by Act No. 5736, Feb. 1, 1999>

SECTION 4 Accounting and Supervision

Article 112 (Report and Inspection)

(1) The Financial Supervisory Commission may, if deemed necessary in the public interest or for theprotection of investors, order the Korea Exchange to file reports or materials for reference withrespect to its business and property, and have the FSS Governor inspect its business, status ofproperty, accounting books, records, and other related materials. <Amended by Act No. 5254, Jan.13, 1997; Act No. 5498, Jan. 8, 1998; Jan. 29, 2004>

(3) In case where the FSS Governor inspects according to the provisions of paragraph (1), the FSSGovernor shall report the result of the inspection to the Financial Supervisory Commission.<Amended by Act No. 5254, Jan. 13, 1997; Act No. 5498, Jan. 8, 1998>

Article 113

Deleted. <by Act No. 3945, Nov. 28, 1987>

Article 114

Deleted. <by Act No. 6176, Jan. 21, 2000>

Article 115 (Approval of Regulations)

(1) Where the Korea Exchange intends to adopt the Business Regulations, Listing Regulations,Disclosure Regulations and other regulations (including rules; hereinafter the same shall apply)relating to business which are necessary for the administration of the securities market, the KoreaExchange shall obtain the approval of the Financial Supervisory Commission. The same shall alsoapply in case of the amendment or repeal thereof. <Amended by Act No. 3945, Nov. 28, 1987; ActNo. 5254, Jan. 13, 1997; Act No. 5498, Jan. 8, 1998; Act No. 5539, May 25, 1998; Act No. 5736, Feb.1, 1999; Act No. 5982, May 24, 1999; Jan. 29, 2004>

(2) When the Minister of Finance and Economy deems that the sale and purchase transactions ofsecurities cannot be normally made because of natural disaster, warfare, disturbance, sudden andsignificant change in economic conditions or other incidents similar thereto, he may order thetemporary closing of the securities market or take other necessary measures. <Amended by Act No.5254, Jan. 13, 1997; Act No. 5539, May 25, 1998>

CHAPTER VII Deleted.

Articles 118 through 144

Deleted. <by Act No. 5498, Jan. 8, 1998>

CHAPTER VIII ORGANIZATIONS CONCERNED WITH SECURITIES

SECTION 1 Securities Finance Company

Article 145 (Establishment)

(1) Any person who is engaged in the business referred to in Article 147 (hereinafter referred toas a securities finance company) shall be a licensed stock company by the Minister of Finance andEconomy. <Amended by Act No. 5254, Jan. 13, 1997; Act No. 5539, May 25, 1998>

(2) Any person who intends to obtain a license referred to in paragraph (1) shall file a writtenapplication including such information as designated in the following subparagraphs with theMinister of Finance and Economy: <Amended by Act No. 5254, Jan. 13, 1997; Act No. 5539, May 25,1998>

1. Name;

2. Location of business office; and

3. Matters relating to stated capital and assets.

(3) A written application referred to in paragraph (2) shall be accompanied by such documents asdesignated in the following subparagraphs: <Amended by Act No. 5254, Jan. 13, 1997; Act No.5539, May 25, 1998>

1. Articles of association and the regulations relating to business;

2. Curricula vitae and certificates of identity of promoters;

3. Project planning statement and the estimated income and expenditure statement for a period of twoyears after its establishment; and

4. Documents prescribed by the Minister of Finance and Economy other than those referred to insubparagraphs 1 through 3.

Article 146 (Amount of Stated Capital)

Amount of stated capital of a securities finance company shall be two billion won or more.

1. To loan money for securities market making and money for underwriting to underwriters;

2. To loan through the clearing organ of the Korea Exchange such money or securities as may benecessary in the settlement of sale and purchase transactions on the securities market or theKOSDAQ;

3. To lend money by collateralizing securities or lend securities;

4. To lend money to public investors through underwriters for purchasing stocks through publicoffering;

5. To effect sale and purchase transactions of bonds within such extent as may be prescribed by thePresidential Decree;

6. To undertake safekeeping in connection with securities;

7. To trust money under the Trust Business Act;

8. To perform the affairs of a trustee company under the Act on Business of Operating IndirectInvestment and Assets;

9. To perform the affairs of an asset deposit company under the Act on Business of OperatingIndirect Investment and Assets; and

10. To be approved by the Minister of Finance and Economy other than those referred to insubparagraphs 1 through 9.

(2) Where a securities finance company carries on the trust business under paragraph (1) 7, itshall be deemed a financial institution engaging concurrently in the trust business under the TrustBusiness Act, which is not subject to the provisions of Articles 7 (1), 8-2, 15, 15-2, 16, and 24-3of the Trust Business Act. <Newly Inserted by Act No. 6623, Jan. 26, 2002>

Article 148

Deleted. <by Act No. 5254, Jan. 13, 1997>

Article 149 (Restrictions on Officers)

(1) Any officer who is engaged in the regular business of a securities finance company (including aperson who practically performs the function of officer; hereinafter the same shall apply) shall bea person other than officers and employees of a securities company. <Amended by Act No. 3541,Mar. 29, 1982>

When any officer of a securities finance company is elected by the illegal means, or violates thisAct, the orders pursuant to this Act or the articles of association of the securities financecompany, the Financial Supervisory Commission may request it to discharge such officer. <Amendedby Act No. 5498, Jan. 8, 1998>

Article 154 (Liabilities of Officers)

The provisions of Article 58 hereof and Article 11 of the Korea Exchange Act shall apply mutatismutandis to a securities finance company: Provided, That the provisions of Article 11(3) of thesame Act shall not apply mutatis mutandis to officers who are not engaged in full time. <Jan.29, 2004>

Article 155 (Dispositions against Violations of Acts and Subordinate Statutes)

(1) The provisions of Article 55 (excluding paragraph (1) 5 through 7 of the same Article) shallapply mutatis mutandis to the cancellation of a securities financial business license for asecurities finance company. In this case, the Financial Supervisory Commission shall be deemedthe Minister of Finance and Economy. <Amended by Act No. 6176, Jan. 21, 2000>

(2) Where any securities finance company falls under any of the following subparagraphs, the

Financial Supervisory Commission may order the suspension of its business in whole or in part for aspecified period not exceeding six months: <Amended by Act No. 6623, Jan. 26, 2002>

1. Where it does business without obtaining approval under Article 147 (1) 10;

2. Where it fails to comply with a request to discharge its officer under Article 153 without anyjustifiable cause; and

The provisions of Article 53 shall apply mutatis mutandis to a securities finance company. In thiscase, the cancellation of a securities business license referred to in Article 53 (5) 1 shall bedeemed a request for the cancellation of license to the Minister of Finance and Economy.<Amended by Act No. 6176, Jan. 21, 2000>

Article 158 (Discontinuance of Business and Dissolution)

The resolution of a securities finance company for the discontinuance of its business and for thedissolution shall be subject to the authorization of the Minister of Finance and Economy.<Amended by Act No. 5254, Jan. 13, 1997; Act No. 5539, May 25, 1998>

Article 159

Deleted. <by Act No. 5736, Feb. 1, 1999>

Article 160 (Issuance of Corporate Bonds)

(1) Notwithstanding the provisions of Article 470 of the Commercial Act, any securities financecompany may issue the corporate bonds up to 20 times the aggregate amount of its stated capital andreserve. <Amended by Act No. 5521, Feb. 24, 1998; Act No. 6176, Jan. 21, 2000>

(2) The corporate bonds issued by a securities finance company pursuant to the provisions ofparagraph (1) shall be considered to be the bonds pursuant to the provisions of Article 2 (1) 3.

(3) Any securities finance company may temporarily issue corporate bonds in excess of the limit toredeem corporate bonds issued in accordance with paragraph (1). In this case, it shall be subjectto the redemption of corporate bonds already issued within one month after they are issued.<Newly Inserted by Act No. 6176, Jan. 21, 2000>

(4) Matters necessary for the issuance of corporate bonds by a securities finance company pursuantto the provisions of paragraph (1), shall be prescribed by the Presidential Decree.[This Article Wholly Amended by Act No. 5254, Jan. 13, 1997]

Article 161 (Deposit of Money)

(1) Any securities finance company may receive a deposit of money from the Korea Exchange,securities companies, other securities-related institutions, and such persons as designated by theOrdinance of the Ministry of Finance and Economy. <Amended by Act No. 5254, Jan. 13, 1997; ActNo. 5539, May 25, 1998; Jan. 29, 2004>

(2) Any securities finance company may, if necessary for the performance of deposit pursuant toparagraph (1), issue debt instruments in accordance with the Ordinance of the Ministry of Financeand Economy. <Amended by Act No. 5254, Jan. 13, 1997; Act No. 5539, May 25, 1998>

(3) In case of paragraphs (1) and (2), the Bank of Korea Act and the Banking Act shall not apply.

SECTION 2 Korea Securities Dealers Association

Sub-Section 1 Establishment and Supervision

Article 162 (Establishment)

(1) A Korea Securities Dealers Association shall be established for the purpose of maintainingbusiness orders between securities companies, assuring fair trading of securities, and protectinginvestors.

(2) The Association shall be a juristic person as the organ consisting of members.

(3) The Association shall place its principal office in the Seoul Special Metropolitan City, andmay establish its branch offices in necessary places.

(4) The Association shall come into existence by the registration of incorporation at the locationof the principal office under the conditions as prescribed by the Presidential Decree.[This Article Wholly Amended by Act No. 5254, Jan. 13, 1997]

(2) The Association shall, where it intends to change matters prescribed by the Presidential Decreein the articles of association, obtain approval from the Financial Supervisory Commission.<Newly Inserted by Act No. 6176, Jan. 21, 2000>

Article 165 (Membership Dues)

The Association may collect membership dues from members under the conditions as prescribed by thearticles of association.

Article 166

Deleted. <by Act No. 5423, Dec. 13, 1997>

Article 167

Deleted. <by Act No. 5254, Jan. 13, 1997>

Article 168 (Order of Suspension of Business, etc.)

In case where any event described in the following subparagraphs occurs, the Financial SupervisoryCommission may order the Association to suspend its business or may request it to discharge theofficer concerned in the public interest and for the protection of investors: <Amended by ActNo. 3541, Mar. 29, 1982; Act No. 5498, Jan. 8, 1998>

1. When the Association has violated Acts and subordinate statutes or disposition taken byadministrative authorities pursuant to Acts and subordinate statutes; and

2. When any officer of the Association has violated the articles of association of the Associationor regulations relating to the business of the Association or has abused his authorities.

The provisions of the Civil Act relating to an incorporated association shall apply mutatismutandis to the Association except otherwise provided for in this Act or the orders pursuant tothis Act.

Article 171 (Prohibition of Use of Similar Name)

Any person other than the Korea Securities Dealers Association shall not use the name SecuritiesDealers Association or any other name similar thereto. <Amended by Act No. 5254, Jan. 13,1997>

Article 172 (Securities Training Institute)

The Association may establish a Securities Training Institute in order to improve qualifications ofpersons who engage in securities business and to diffuse professional knowledge about securities.

Sub-Section 2 Articles 172-2 through 172-4 Deleted Jan. 29, 2004

Article 172-2

Deleted Jan. 29, 2004

Article 172-3

Deleted Jan. 29, 2004

Article 172-4

Deleted Jan. 29, 2004

SECTION 3 Securities Depository

Article 173 (Establishment)

(1) A Securities Depository (hereinafter referred to as the Depository) shall be established inorder to promote a concentrated deposition of securities, transfer of securities between theiraccounts, and harmonious trading of securities. <Amended 29, 2004>

(2) The Depository shall be a juristic person.

(3) The Depository shall come into existence by the registration of incorporation at the locationof the principal office under the conditions as prescribed by the Presidential Decree.[This Article Wholly Amended by Act No. 4701, Jan. 5, 1994]

Article 173-2 (Business)

(1) The Depository shall carry on the business as prescribed in the following subparagraphs inorder to attain its objects: <Amended by Act No. 5254, Jan. 13, 1997; Act No. 5736, Feb. 1,1999>

1. Business concentrating the deposition of securities;

2. Business transferring securities between accounts;

3. Business depositing securities and transferring between accounts through opening of a mutualaccount with a foreign juristic person (hereinafter referred to as a foreign depositioninstitution) which carries on the business similar to the Depository;

4. Securities transfer agency business (including the agency business for payment of dividend,interest, and redemption of securities and the agency business for issuing securities);

5. Undertaking safekeeping of securities;

6. Business other than those as referred to in subparagraphs 1 through 5, which is authorized

under this Act and other Acts;

7. Business incidental to those as referred to in subparagraphs 1 through 6; and

8. Businesses as determined by the articles of association other than those as referred to insubparagraphs 1 through 7.

No person other than the Depository may carry on any business receiving securities, and settlingaccounts by means of a transfer between accounts in lieu of giving and receiving such securities.[This Article Newly Inserted by Act No. 4701, Jan. 5, 1994]

Article 173-4 (Matters to be Provided for in Articles of Association)

The articles of association of the Depository shall include the following matters <Amended 29,2004>:

1. Objectives;

2. Name;

3. Location of a principal office;

4. Matters relating to stocks and stated capital;

4-2. Matters relating to the qualification for acquisition and ceiling of holding of stocks

5. Matters relating to the general meeting of stockholders and the board of directors;

The provisions of the Commercial Act concerning the stock company shall apply mutatis mutandis tothe depositor, unless otherwise prescribed by this Act or any order issued pursuant to this Act.[This Article Newly Inserted by Act No. 4701, Jan. 5, 1994]

Article 173-6 (Officers)

(1) The officers of the Depository shall be the president, managing director, director and auditor.

(2) The president shall be appointed by the general meeting of stockholders, but he shall besubject to approval of the Minister of Finance and Economy. <Amended by Act No. 5736, Feb. 1,1999>

Article 173-8 (Notification of Details of Issuance and Details of Securities Stolen, Lost orDestroyed)

(1) In case where an issuer of securities to be deposited issues newly securities, the issuer shallnotify the type of such securities and other matters as prescribed by the Ordinance of the Ministryof Finance and Economy to the Depository without delay. <Amended by Act No. 5539, May 25,1998>

(2) In case where an issuer of securities to be deposited is notified of orders with respect to theseizure, provisional seizure or provisional disposition of securities or receives a report that thesecurities are stolen, lost or destroyed (including public summons and nullification judgmentpursuant to the Civil Procedure Act), such issuer shall notify the type of such securities andother matters as prescribed by the Ordinance of the Ministry of Finance and Economy to theDepository without delay. <Amended by Act No. 5539, May 25, 1998; Act No. 6423, Mar. 28,2001>

(3) The Depository which has received the notifications pursuant to paragraphs (1) and (2) shallmake public the details of such reports.[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 174 (Deposition in Depository, etc.)

(1) Any person who intends to deposit securities in the Depository, shall open an account in theDepository. <Amended by Act No. 4701, Jan. 5, 1994>

(2) Any person who has opened an account pursuant to paragraph (1) (hereinafter referred to as adepositor), may deposit securities which he holds and has been deposited by his customers in theDepository with the consent of customers. <Amended by Act No. 4701, Jan. 5, 1994>

(3) The Depository shall prepare and keep the depositors account book in which the followingmatters are stated, but shall establish therein a distinction between the portion owned bydepositors and the portion deposited by customers: <Amended by Act No. 4701, Jan. 5, 1994; ActNo. 5254, Jan. 13, 1997; Act No. 5539, May 25, 1998>

1. Name and address of a depositor;

2. Type and number of securities which are deposited (hereinafter referred to as depositedsecurities) and the name of an issuer; and

3. Other matters as prescribed by the Ordinance of the Ministry of Finance and Economy.

(4) The Depository may keep deposited securities in a state mixed by type and item. <Amended byAct No. 4701, Jan. 5, 1994>

(5) In case where a depositor or his customer accepts or subscribes for securities or requestsissuance of securities based on other grounds, an issuer of securities may, upon a request of thedepositor or his customer, issue or register (this refers to a registration pursuant to the StateBond Act or the Registration of Bonds and Debentures Act; hereinafter the same shall apply)securities by the name of the Depository in lieu of the depositor or his customer. <NewlyInserted by Act No. 4469, Dec. 31, 1991; Act No. 4701, Jan. 5, 1994; Act No. 5254, Jan. 13,1997>[This Article Wholly Amended by Act No. 3945, Nov. 28, 1987]

Article 174-2 (Deposition, etc. to Depositor by Customers)

(1) Any depositor who redeposits securities deposited by customers in the Depository, shall prepareand keep the customers account book in which the following matters are stated: <Amended by ActNo. 4701, Jan. 5, 1994; Act No. 5254, Jan. 13, 1997; Act No. 5539, May 25, 1998>

1. Names and addresses of customers;

2. Types and number of deposited securities, and names of issuers; and

3. Other matters as prescribed by the Ordinance of the Ministry of Finance and Economy.

(2) When a depositor has stated matters referred to in paragraph (1), he shall deposit withoutdelay securities in the Depository specifying that such securities are deposited by customers.<Amended by Act No. 4701, Jan. 5, 1994; Act No. 5254, Jan. 13, 1997>

(3) When a depositor has stated matters referred to in paragraph (1), he shall keep the securitiesseparately from his own until he deposits them in the Depository pursuant to paragraph (2).<Amended by Act No. 4701, Jan. 5, 1994; Act No. 5254, Jan. 13, 1997>

(4) The securities stated in the customers account book pursuant to paragraph (1) shall beconsidered deposited in the Depository at the time of statement. <Amended by Act No. 4701, Jan.5, 1994>[This Article Newly Inserted by Act No. 3945, Nov. 28, 1987]

Article 174-3 (Effect of Statement in Account Book)

(1) Persons who are stated in the customers account book and the depositors account book shall beconsidered to hold the respective securities.

(2) If a transfer between accounts is stated in the customers account book and the depositorsaccount book, the purpose of which is a transfer of or creation of pledge on securities, thestatement of such transfer or creation shall have the same effect as if the securities had beendelivered.

(3) Notwithstanding the provisions of Article 3 (2) of the Trust Act, a trust of depositedsecurities may oppose against the third person, by stating that they are the trust properties inthe customers account book or the depositors account book.

(4) In case where a sale and purchase transaction of stocks on the securities market or KOSDAQ issettled by means of a transfer between accounts in the customers account book or the depositorsaccount book before the stock certificates thereof are issued, notwithstanding the provisions ofArticle 335 (3) of the Commercial Act, it shall be effective against an issuing

(1) Customers of a depositor and the depositor shall be presumed to have co-ownership share on thedeposited securities according to the types, items and quantity of securities stated respectivelyin the customers account book and the depositors account book.

(2) Any customer of a depositor or his pledgee may request at any time the depositor to return thedeposited securities corresponding to a co-ownership share of the customer, and the depositor mayrequest the Depository to return the deposited securities corresponding to his co-ownership share.In this case, a consent of the pledgee shall be required with respect to the deposited securitieswhich are the object of the right of pledge. <Amended by Act No. 4701, Jan. 5, 1994>

(3) The Depository may, in case where such causes as prescribed by the Presidential Decree occur,limit the return or inter-account transfer of the portion deposited by customers among depositedsecurities under the conditions as designated by the Ordinance of the Ministry of Finance andEconomy. <Newly Inserted by Act No. 5254, Jan. 13, 1997; Act No 5423, Dec. 13, 1997; Act No.5539, May 25, 1998; Act No. 6423, Mar. 28, 2001>[This Article Newly Inserted by Act No. 3945, Nov. 28, 1987]

Article 174-5 (Liability for Coverage)

(1) In case where the deposited securities becomes insufficient, the Depository and the depositoras prescribed in Article 174-2 (1) shall make up such insufficient portion according to the methodsand procedure as prescribed by the Presidential Decree. In this case, the Depository and thedepositor may exercise a right to indemnification to a person who is liable for such insufficiency.<Amended by Act No. 4701, Jan. 5, 1994; Act No. 5254, Jan. 13, 1997>

(2) The depositor as referred to in paragraph (1) shall bear a liability for coverage pursuant to

paragraph (1), even after closing the account as prescribed in Article 174 (1): Provided, That incase where five years has elapsed from the time at which the account is closed, he shall beexempted from the liability.[This Article Newly Inserted by Act No. 3945, Nov. 28, 1987]

Article 174-6 (Exercise of Right to Deposited Securities)

(1) The Depository may exercise the right to the deposited securities according to a request of adepositor or customer. In this case, a request of a customer shall be made through the depositor.<Amended by Act No. 4701, Jan. 5, 1994>

(2) The Depository may request a change of entry in the register or a registration in its own namewith respect to the deposited securities. <Amended by Act No. 5254, Jan. 13, 1997>

(3) With respect to stocks with regard to which the entry in the register is changed in the name ofthe Depository pursuant to paragraph (2), it may exercise the right as a stockholder as to mattersas prescribed in Article 358-2 of the Commercial Act, as to statement in the register ofstockholders and as to stock certificates, even though there is no request by the depositor.<Amended by Act No. 4701, Jan. 5, 1994>

(4) In case where a company issuing stock certificates makes a notification or public notice on aconvocation of the general meeting of stockholders, with respect to stockholders holding stockcertificates with regard to which the entry in the register is changed in the name of theDepository, the company shall notify personally or publicly the particulars concerning the exerciseof voting rights held by the Depository as referred to in paragraph (5). <Newly Inserted by ActNo. 4469, Dec. 31, 1991; Act No. 4701, Jan. 5, 1994; Act No. 5254, Jan. 13, 1997>

(5) If a stockholder holding stock certificates with regard to which the entry in the register ischanged in the name of the Depository fails to express his intention to exercise directly or byproxy or not to exercise his voting right to the Depository not later than five days before thedate of the general meeting of stockholders, the Depository may exercise such voting right:Provided, That the same shall not apply to the following cases: <Newly Inserted by Act No. 4469,Dec. 31, 1991; Act No. 4701, Jan. 5, 1994; Act No. 5254, Jan. 13, 1997; Act No. 5498, Jan. 8, 1998;Act No. 5736, Feb. 1, 1999; Act No. 6176, Jan. 21, 2000; Act No. 6623, Jan. 26, 2002>

1. Where a company issuing the stock certificates fails to make a notification or public notice onthe exercise of voting right by the Depository pursuant to paragraph (4);

2. Where a company issuing the stock certificates requests the Financial Supervisory Commission toprevent the Depository from exercising its voting right;

3. Where subject matters of the general meeting of stockholders fall under any of matters asprescribed in Articles 360-3, 360-16, 374, 438, 518, 519, 522, 530-3 and 604 of the Commercial Act;and

4. Where a stockholder concerned exercises directly or by proxy his voting right at the generalmeeting of stockholders.

(6) Matters with respect to which any company issuing stock certificates is required to notify theDepository in order for the Depository to exercise its rights under paragraph (1) and other mattersnecessary for the Depository to exercise its voting right under paragraph (5) shall be prescribedby the Presidential Decree. <Amended by Act No. 6423, Mar. 28, 2001>

(1) Co-owners of stock certificates of deposited securities (hereinafter referred to as beneficialowners) shall be considered to hold stocks equivalent to the co-ownership shares as prescribed inArticle 174-4 (1) in exercising the rights as stockholders.

(2) A beneficial owner may not exercise the right as prescribed in Article 174-6 (3): Provided,That the same shall not apply with respect to a notification to stockholders by a company, and aninspection or transcription of the register of stockholders as prescribed in Article 396 (2) of theCommercial Act.

(3) When a company issuing stock certificates of deposited securities has fixed a certain period ordate pursuant to Article 354 of the Commercial Act, the company shall notify the Depository of suchfact without delay; and the Depository shall notify a company issuing stock certificates concernedor a company which conducts change of entry in a register as an agent of the matters referred to inthe following subparagraphs with respect to beneficial owners on the first day of the period or onthe date (hereafter in this Article referred to as fixed date for the closing of register ofstockholders) without delay: <Amended by Act No. 4701, Jan. 5, 1994; Act No. 5254, Jan. 13,1997>

1. Name and address; and

2. Types and number of stocks as prescribed in paragraph (1).

(4) The Depository may request a depositor as prescribed in Article 174-2 (1) to notify matters asreferred to in subparagraphs of paragraph (3) with respect to beneficial owners on the fixed datefor the closing of register of stockholders. In this case, the depositor, upon receiving therequest, shall notify it without delay. <Amended by Act No. 4701, Jan. 5, 1994>

(1) Any issuing company or company which conducts change of entry in a register as an agent shall,upon receiving a notification pursuant to Article 174-7 (3), prepare and keep a register ofbeneficial owners, stating therein the notified matters and the date of notification.

(2) Any statement in a register of beneficial owners relating to stocks the certificates of whichare deposited in the Depository, shall have the same effect as the statement in a register ofstockholders. <Amended by Act No. 4701, Jan. 5, 1994>

(3) When an issuing company or a company which conducts change of entry in a register as an agentpursuant to the provisions of paragraph (1) deems that a person stated in a register ofstockholders as a stockholder is the same as a person stated in a register of beneficial owners asa beneficial owner, the issuing company or the company which conducts change of entry in a registeras an agent shall sum up the number of stocks on the register of stockholders and those on theregister of beneficial owners for the exercise of rights as a stockholder.[This Article Newly Inserted by Act No. 3945, Nov. 28, 1987]

(1) In case where a depositor or a customer of depositor requests the Depository to issue adocument certifying the deposition of securities (hereinafter referred to as a certificate ofbeneficial ownership) in order to exercise the right as a stockholder, the Depository may issuethe certificate of beneficial ownership under the conditions as prescribed by the Ordinance of theMinistry of Finance and Economy. In this case, a request of the customer shall be made through thedepositor. <Amended by Act No. 5539, May 25, 1998>

(2) The Depository shall, in case of issuing the certificate of beneficial ownership pursuant toparagraph (1), notify the issuing company concerned of such fact without delay.

(3) In case where a depositor or a customer of depositor has filed the certificate of beneficialownership which is issued pursuant to paragraph (1) with the issuing company, notwithstanding theprovisions of Article 337 (1) of the Commercial Act, the depositor or the customer of depositor mayset up against the issuing company.[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

(1) The provisions of Articles 174-2, 174-5, 174-6 (4) through (6), 174-7 and 174-8 (3) shall notapply to foreign depositing institutions: Provided, That this shall not apply where any foreigndepositing institution makes a request for its application. <Amended by Act No. 5736, Feb. 1,1999>

(2) In the event that an issuer of deposited securities is a foreign corporation, etc., theprovisions of Articles 174 (5), 174-6 (4) through (6), 174-7, 174-8 and 174-10 shall not apply:Provided, That the same shall not apply to a case where the relevant foreign corporation, etc.requests the application thereof. <Newly Inserted by Act No. 6423, Mar. 28, 2001>[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 174-12 (Report and Confirmation, etc.)

The Depository may request a depositor to file the report or data concerning the depositingbusiness, inspect the relating account books, or confirm the status of custody, etc. of securitieskept under the depositors own custody.[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

(1) A listed corporation, KOSDAQ registered corporation and company which conducts change of entryin a register as an agent (referring to a person who obtains a license pursuant to Article 180 (1);hereinafter the same shall apply) shall be subject to the Securities Handling Regulations asdetermined by the Depository with respect to printed form, issuance, retirement, issuance forreplacement, effacement, and other matters regarding control of securities. <Amended Jan. 29,2004>

(2) The Depository may control the printed forms of securities which any listed corporation orKOSDAQ registered corporation keeps as spares for issuance of securities (hereinafter referred toas spare certificates). <Amended Jan. 29, 2004>

(3) The Depository may, if it deems necessary, ask any listed corporation, KOSDAQ registeredcorporation and any company which conducts change of entry in a register as an agent to submit dataregarding the procedure of handling securities and the control of spare certificates pursuant toparagraph (1) and may direct its staff personnels to confirm the data. <Amended Jan. 29,2004>

(4) When an unlisted corporation intends to use printed forms pursuant to the Securities HandlingRegulations of the Depository with respect to securities of the corporation concerned, it shallobtain the approval of the Depository. In this case, the provisions of paragraphs (1) through (3)shall apply mutatis mutandis.

(5) If any listed corporation becomes an unlisted corporation, the provisions of paragraphs (1)through (3) shall apply mutatis mutandis to such corporation until all of printed forms pursuant tothe Securities Handling Regulations of the Depository and the securities issued by using theprinted forms is entirely effaced.[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

(1) Any person who may conduct the business of matching orders of sale and purchase transactions onthe securities market shall be a stock company which obtains the license of the FinancialSupervisory Commission. <Amended by Act No. 5254, Jan. 13, 1997; Act No. 5539, May 25, 1998; ActNo. 5736, Feb. 1, 1999; Act No. 5982, May 24, 1999>

(2) Any person who obtained the license pursuant to paragraph (1) (hereinafter referred to as anorder matching company) may conduct the business of purchase and sale of securities which isnecessary in performing the function of order matching on the securities market.

(3) Any order matching company shall be subject to inspection by the Korea Exchange with respect toits business and properties. <Amended Jan. 29, 2004>

(1) A company which may conduct the business of changing entry in a register as an agent(hereinafter referred to as a transfer agent) shall be a stock company registered with theFinancial Supervisory Commission. <Amended by Act No. 5254, Jan. 13, 1997; Act No. 5539, May 25,1998; Act No. 5736, Feb. 1, 1999; Act No. 5982, May 24, 1999>

(3) The provisions of Articles 53, 149, 151 (1), 153, 154, 155 (2) and 158 of this Act and theprovisions of Article 152 of the Act on Business of Operating Indirect Investment and Assets shallapply mutatis mutandis to a transfer agent. <Amended by Act No. 6987, Oct. 4, 2003>

Article 181 (License and Supervision of Other Organizations relating to Securities)

(1) Any person who intends to establish an organization which is composed of investors insecurities, stock-listed corporations, or other persons prescribed by the Presidential Decree forthe purpose of assuring public interest, protecting investors or maintaining orderly securitiesmarket, shall obtain the license of the Minister of Finance and Economy under the conditions asprescribed by the Presidential Decree. <Amended by Act No. 3541, Mar. 29, 1982; Act No. 5254,Jan. 13, 1997; Act No. 5539, May 25, 1998; Act No. 5736, Feb. 1, 1999>

(2) The provisions of Articles 53, 151 (1) and 168 shall apply mutatis mutandis to organizationsrelating to securities which are established with the license pursuant to paragraph (1).<Amended by Act No. 5254, Jan. 13, 1997>

1. Where any issued bill or check is dishonored, or when transaction with banks is suspended orprohibited;

2. Where the business is suspended in part or in whole;

3. Where a petition for the reorganization procedure of the corporation is filed or thereorganization thereof is virtually commenced pursuant to the provisions of relevant Act;

4. Where there is a resolution of the board of directors with respect to changing the objective ofbusiness;

5. Where it suffers enormous damages caused by a disaster;

6. Where a lawsuit which may have great influence upon the listed securities or the securitieslisted on KOSDAQ is filed against it;

7. Where any of the events referred to in Articles 374, 522, 527-2, 527-3 and 530-2 of theCommercial Act occurs;

8. Where causes for dissolution pursuant to the provisions of relevant Act take place;

9. Where there is a resolution of the board of directors with respect to increase or decrease ofcapital or the retirement of stocks;

10. Where the operation is suspended or is unable to be continued due to special causes;

11. Where a correspondent bank commences a control of the corporation concerned;

12. Where there is a resolution of the board of directors, or a decision of the representativedirector or other person who is prescribed by the Presidential Decree with respect to theacquisition and disposal of the treasury stocks; and

13. Where the fact, which is prescribed by the Presidential Decree as the matters having seriouseffects on the management and properties, etc. of corporation other than subparagraphs 1 through12, occurs.

(2) The Korea Exchange may, if it is necessary for the fair transaction of securities and theprotection of investors, request a listed corporation or a KOSDAQ registered corporation to confirmas to whether a rumor and news concerning such listed corporation or such KOSDAQ registeredcorporation is true or not; and the Korea Exchange may, if the price or the trading volume ofsecurities issued by the listed corporation or the KOSDAQ registered corporation is changedremarkably, request such corporation to disclose as to whether there is important information asprescribed in Article 188-2. In this case, the corresponding corporation shall comply with itwithout delay, except in case where it is difficult to make such disclosure due to other Acts andsubordinate statutes, natural disaster and/or other reasons similar thereto. <Amended by Act No.4469, Dec. 31, 1991; Act No. 6176, Jan. 21, 2000; Jan. 29, 2004>

(3) If a listed corporation or a KOSDAQ registered corporation fails to discharge faithfully theduty of report pursuant to paragraph (1) or to comply with a request for confirmation or disclosurepursuant to paragraph (2), the Korea Exchange or the Association shall notify it to the FinancialSupervisory Commission so as to take a measure as prescribed in the provisions of Article 193.<Newly Inserted by Act No. 3945, Nov. 28, 1987; Act No. 4469, Dec. 31, 1991; Act No. 5498, Jan.8, 1998; Act No. 6176, Jan. 21, 2000; Jan. 29, 2004>

(5) Where the Financial Supervisory Commission or the Korea Exchange deems it necessary to promptlyinform an investor of the contents of the matters listed in paragraph (1) 1, 3, 6, 8 and

11 and matters requested to be confirmed or disclosed under paragraph (2) as they threaten to haveimportant effect on the investors judgement to invest, it may request any administrative agency orother related agencies to provide or exchange necessary information pursuant to the PresidentialDecree. In this case, the agency which has received such request shall cooperate with it unlessthere exists any special cause. <Newly Inserted by Act No. 5736, Feb. 1, 1999; Act No. 6176,Jan. 21, 2000; Jan. 29, 2004>

Article 186-2 (Submission of Annual Business Report, etc.)

(1) A stock-listed corporation, KOSDAQ registered corporation and such corporations as prescribedby the Presidential Decree shall submit an annual business report to the Financial SupervisoryCommission and the Korea Exchange within 90 days after the lapse of each business year: Provided,That the same shall not apply to the case as determined by the Presidential Decree. <Amended byAct No. 5498, Jan. 8, 1998; Jan. 29, 2004>

(2) Any business report under paragraph (1) shall include the objectives, firm name, details of thebusiness, the remunerations of officers (including stock options granted in accordance with Article189-4 and such stock options shall be limited to those prescribed by the Presidential Decree),financial matters and other matters prescribed by the Presidential Decree. <Amended by Act No.5539, May 25, 1998; Act No. 6176, Jan. 21, 2000; Act No. 7025, Dec. 31, 2003>

(3) Where a corporation is subject to submission of a business report under paragraph (1) for thefirst time, it shall promptly (by the time limit for submission, where a corporation is subject tosubmission of an annual business report during the period to submit the business report referred toin paragraph (1)) submit the annual business report of the immediately preceding business year tothe Financial Supervisory Commission and the Korea Exchange: Provided, That this shall not applywhere the corporation has already disclosed the matters equivalent to the annual business report ofthe immediately preceding business year through a registration statement of securities, etc.<Amended by Act No. 5736, Feb. 1, 1999; Jan. 29, 2004>

(4) The annual business report pursuant to paragraph (1) shall be prepared in accordance with suchmethod and form determined by the Financial Supervisory Commission by type and line of business.<Amended by Act No. 5423, Dec. 13, 1997; Act No. 5539, May 25, 1998; Act No. 6176, Jan. 21,2000>

(5) Where a corporation which has to submit an annual business report pursuant to paragraph(1) is a company affiliated with a conglomerate which has to prepare conglomerate combinedfinancial statements pursuant to Article 1-3 of the Act on External Audit of Stock Companies, itshall submit conglomerate combined financial statements as prescribed by subparagraph 3 of Article1-2 of the same Act to the Financial Supervisory Commission and the Korea Exchange within sixmonths from the end of a business year. <Newly Inserted by Act No. 5736, Feb. 1, 1999; Jan. 29,2004>[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 186-3 (Submission of Semiannual Report, etc.)

A corporation which is under obligation to submit an annual report pursuant to the provisions ofArticle 186-2 (1), shall submit a business report for 6 months from the beginning of a businessyear (hereinafter referred to as a semiannual report) and business reports for 3 months and 9months from the beginning of a business year (hereinafter referred to as quarterly reports),respectively, to the Financial Supervisory Commission and the Korea Exchange within 45 days afterthe lapse of the period. <Amended by Act No. 5498, Jan. 8, 1998; Act No. 5736, Feb. 1, 1999>[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Notwithstanding the provisions of Articles 186-2 and 186-3, different regulations, such asproviding for different period of submission, etc., may apply with respect to a foreigncorporation, etc. under the conditions as prescribed by the Presidential Decree.[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

(1) Officers, employees or major stockholders (referring to those who hold stocks or contributioncertificates of 10/100 or more of the total number of voting stocks issued or of the total amountof contributions for their own account regardless of the title thereof, and those who areprescribed by the Presidential Decree; hereinafter the same shall apply) of a stock-listedcorporation or KOSDAQ registered corporation shall not sell certificates of stocks (includingcontribution certificates), convertible bonds, bonds with warrants, warrants and securities asprescribed by the Ordinance of the Ministry of Finance and Economy (hereinafter referred to asstock certificates, etc.) of the corporation listed on the Korea Exchange or KOSDAQ, unless theyown the stock certificates, etc. <Amended by Act No. 4469, Dec. 31, 1991; Act No. 5254, Jan. 13,1997; Act No. 5539, May 25, 1998; Act No. 5736, Feb. 1, 1999; Jan. 29, 2004>

(3) Stockholders of the corporation concerned or the Securities Futures Commission may demand thatsuch corporation make the request pursuant to the provisions of paragraph (2),

and such stockholders or the Securities Futures Commission may, unless the corporationconcerned makes such request within two months after the date on which such stockholders or theSecurities Futures Commission have demanded such request, make such request by subrogating thecorporation concerned. <Amended by Act No. 5254, Jan. 13, 1997; Act No. 5498, Jan. 8, 1998>

(5) The right referred to in paragraphs (2) and (3) shall lapse, unless the right is exercisedwithin two years after the date on which such profit is gained.

(6) Any officer or major stockholder of a stock-listed corporation or KOSDAQ registered corporationshall report the situation of such stocks of the corporation concerned, held by him for his ownaccount regardless of the title thereof to the Securities Futures Commission, and the KoreaExchange or the Association under the conditions as designated by the Presidential Decree withinten days after he becomes an officer or major stockholder; and if the number of stocks held by himis changed, he shall report such fact to the Securities Futures Commission and the Korea Exchangeunder the conditions as prescribed by the Presidential Decree within the 10th day of the monthfollowing the month in which the date on which such change occurs is included. <Amended by ActNo. 4469, Dec. 31, 1991; Act No. 5254, Jan. 13, 1997; Act No. 5423, Dec. 13, 1997; Act No. 5498,Jan. 8, 1998; Act No. 5539, May 25, 1998; Act No. 5736, Feb. 1, 1999; Act No. 6176, Jan. 21, 2000;Jan. 29, 2004>

(8) The provisions of paragraph (2) shall not apply in such case as prescribed by the PresidentialDecree taking into consideration of the nature of selling or purchasing which was carried out inthe capacity of an officer, employee or major stockholder, and in such case where a majorstockholder does not hold such capacity at a time when he sells or purchases stocks.

(1) Any person who is informed of material information which is undisclosed to the public inrelation with affairs, etc. of a listed corporation or KOSDAQ registered corporation (includingcorporations listed within six months) in the course of performing his duties, from among those whofall under any of the following subparagraphs (including those for whom one year has not passedafter they become not to fall under any of subparagraphs 1 through 5 of this paragraph), and thosewho are informed of such information from him, shall not use or have another person use theinformation in connection with sale and purchase or any other transaction of securities issued bythe corporation concerned: <Amended by Act No. 5254, Jan. 13, 1997; Act No. 5521, Feb. 24, 1998;Act No. 5736, Feb. 1, 1999; Jan. 29, 2004>

1. The corporation concerned and its officers, employees and agents;

2. Major stockholders of the corporation concerned;

3. A person who has the authority pursuant to Acts and subordinate statutes of license,authorization, direction, supervision or other authorities with respect to the corporationconcerned;

4. A person who entered into a contract with the corporation concerned; and

5. An agent, employee, and other staff personnel of a person who falls under any of subparagraphs 2through 4 (in case where a person who falls under any of subparagraphs 2 through 4 is acorporation, the officers, employees and agents of such corporation).

(2) The term material information which is undisclosed to the public in paragraph (1) meansinformation which may have important effect on investors judgment on investment and is undisclosedyet to the public by the corporation concerned under the conditions as prescribed by the Ordinanceof the Ministry of Finance and Economy from among any information on fact, etc. falling under anysubparagraph of Article 186 (1). <Amended by Act No. 5254, Jan. 13, 1997; Act No. 5539, May 25,1998>

(3) The provisions of paragraphs (1) and (2) shall apply mutatis mutandis to the case of performingtender offer pursuant to Article 21. In this case, the term the corporation concerned in the mainsentence of paragraph (1) shall be considered as the term issuer of securities which are subjectto tender offer; the term material information, as the term information on carrying out orstopping tender offer; and the term the corporation concerned in each subparagraph of paragraph(1), as the term tender offerer. <Amended by Act No. 5254, Jan. 13, 1997>

[This Article Newly Inserted by Act No. 4469, Dec. 31, 1991]

Article 188-3 (Liability for Damages against Using Undisclosed Information)

(1) Any person who violates the provisions of Article 188-2, shall be liable for damages which aperson who has made a purchase or sale of securities or other transaction suffers from thattransaction.

(2) The claim for damages pursuant to paragraph (1) shall be extinguished by prescription, unless aclaimant exercises such claim for damages for one year after the claimant is informed of the factthat an act in violation of the provisions of Article 188-2 is committed or for three years afterthe offense takes place. <Amended by Act No. 5736, Feb. 1, 1999>

[This Article Newly Inserted by Act No. 4469, Dec. 31, 1991]

Article 188-4 (Prohibition of Unfair Transaction such as Market Manipulation)

(1) No person shall do any acts which fall under any of the following subparagraphs for the

purpose of creating a misleading appearance of active trading or causing any person to make afalse judgment with respect to the sale and purchase transaction of securities listed on thesecurities market or registered on the KOSDAQ <Amended Jan. 29, 2004>:

1. Selling securities after a person has conspired in advance with other person that other personpurchases securities at the same time when the person sells securities and at the same price;

2. Purchasing securities after a person has conspired in advance with other person that other personsells securities at the same time when the person purchases securities and at the same price;

3. Making fictitious sale and purchase transaction which does not accompany the transfer ofownership in the securities transaction; and

4. Entrusting or being entrusted with action as prescribed in subparagraphs 1 through 3 of thisparagraph.

(2) No person shall do any acts which fall under any of the following subparagraphs for the purposeof inducing the sale and purchase transaction of securities on the securities market or KOSDAQ<Amended Jan. 29, 2004>:

1. To effect, to entrust or to be entrusted with, alone or in conspiracy with other persons, saleand purchase transactions in the securities, creating a false or misleading appearance of activetrading or making the price of such securities fluctuate;

2. Disseminating the rumor that the price of concerned securities fluctuates by his or otherpersons manipulation; and

3. Making willfully the representation which is false or misleading with respect to importantmatters in selling or purchasing the concerned securities.

(3) No person shall effect, entrust or to be entrusted with, independently or jointly, the sale andpurchase transaction of securities on the securities market or KOSDAQ, for the purpose of peggingor stabilizing price of securities except as <Amended Jan. 29, 2004>:

1. A securities company (that for the purpose of this Article refers to a securities companythat

enters into an underwriting agreement with the issuer or holder of the securities to beofferedfor sale or sold, as prescribed by the Presidential Decree) effects sale and purchase transactionsin accordance with the Presidential Decree to facilitate the offer for sale or sale of securitiesby stabilizing the price of securities during the period from such a date as prescribed by thePresidential Decree within 30 days prior to the end of the period of offering to the end of theperiod of offering (Stabilization);

2. A securities company effects sale and purchase transactions to make supplies and demands ofsecurities offered for sale or sold in accordance with the Presidential Decree during such a periodnot exceeding 6 months from the listing as prescribed by the Presidential Decree (Market Making);

3. An officer or employee of the issuer of the securities to be offered for sale or sold or anyother person prescribed by the Presidential Decree entrust Stabilization to the securities company;

4. The securities company is entrusted with Stabilization in accordance with Subparagraph 3 above;

5. An underwriter of the securities offered for sale or to be sold entrusts the securities companywith Market Making; or

6. The securities company is entrusted with Market Making in accordance with Subparagraph 5 above.

(4) With respect to purchase and sale or other transaction of securities, no person shall commit anact which falls under any of the following subparagraphs:

1. Disseminating intentionally the false quotations or untrue facts or other rumors or using adeceptive scheme for the purpose of gaining unjust benefits; and

2. Intending to gain money or other benefits which has property value by inducing misunderstandingof other persons, through false representation of any material fact or making use of document inwhich any fact required is omitted.

[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 188-5 (Liability for Damages against Market Manipulation)

(1) A person who violates the provisions of Article 188-4 shall be liable for damages which aperson who has effected a sale and purchase transaction of securities or has entrusted suchsecurities transaction at the price formed due to such violative act on the securities market orKOSDAQ suffers from such transaction or entrustment. <Amended Jan. 29, 2004>

(2) The claim for damages pursuant to paragraph (1) shall be extinguished by prescription, unless aclaimant exercises such claim for damages for one year after the claimant is informed of the factthat an act in violation of the provisions of Article 188-4 is committed or for three years afterthe offense has taken place. <Amended by Act No. 5736, Feb. 1, 1999>

[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 188-6 (Report on Act of Unfair Trade, etc.)

(1) In the event that any person who has known the act of violating this Act, including the act ofunfair trade, etc. provided for in this Section, or has been coerced or solicited to commit the actof violating this Act, including the act of unfair trade, reports or tips his knowledge or suchcohesion and solicitation to the Securities Futures Commission under the conditions as prescribedby the Presidential Decree, the receiver of such report and tip shall keep the identity, etc. ofsuch reporter or such tipper in secret (hereafter in this Article referred to as the reporter,etc.).

(2) Any agency to which the reporters, etc. belong and any company to which the reporters, etc.belong shall not disadvantageously treat them in a direct and indirect manner in connection withsuch reports or tips.

(3) The Securities Futures Commission may pay bounties to the reporters, etc. under the conditionsas prescribed by the Presidential Decree.

[This Article Newly Inserted by Act No. 7025, Dec. 31, 2003]

SECTION 3 Special Treatment for Listed Corporation, etc.

Article 189 (Retirement of Stocks)

(1) Any stock-listed corporation or any KOSDAQ registered corporation may, if the articles ofincorporation of such corporation provide that such corporation may retire its stocks based on aresolution of the board of directors under Article 434 of the Commercial Act as dividends for itsstockholders, retire its stocks based on a resolution of the boards of directors except asotherwise provided for in the provisions of other Acts. <Amended Jan. 29, 2004>

(2) In the event that it is intended to retire stocks under paragraph (1), the board of directorsshall vote on matters falling under each of the following subparagraphs. In this case, the stocksto be retired shall be limited to stocks acquired after a resolution of the board of directors:

1. Kinds and numbers of stocks to be retired;

2. Total value of stocks to be acquired for retirement; and

3. Period for which it is intended to acquire stocks. In this case, such period shall expire priorto a regular general meeting of stockholders called for the first time after the resolution of theboard of directors.

(3) Any stock-listed corporation or any KOSDAQ registered corporation shall, if it acquires itsstocks for the purpose of retiring such stocks under paragraph (1), acquire such stocks accordingto the standards falling under each of the following subparagraphs <Amended Jan. 29, 2004; Dec.29, 2005>:

1. The stocks shall be acquired according to the method of Article 189-2 (1)-1 or 2. In this case,where the stocks are acquired according to the method of subparagraph 1 of the same paragraph, theacquisition period therefor and method thereof shall be made to conform to the standards prescribedby the Presidential Decree; and

2. The amount to be acquired for retiring stocks shall not exceed the amount prescribed by thePresidential Decree within limits of dividends available for stockholders at the end of therelevant business year under Article 462 (1) of the Commercial Act.

(4) Any stock-listed corporation or any KOSDAQ registered corporation shall, if it retires itsstocks under paragraph (1), report the matters of each subparagraph of paragraph (2) and the factof retiring such stocks to a regular general meeting of stockholders called for the first timeafter a resolution of the board of directors with respect to the retirement of such stocks.<Amended Jan. 29, 2004>

(5) In the event that any stock-listed corporation or any KOSDAQ registered corporation acquiresstocks and retires them in violation of the limits as prescribed in paragraph (3) 2, directors whovote for retiring such stocks at a meeting of the board of directors shall be jointly and severallyliable for compensating for the value accruing from the acquisition of the stocks in excess of thelimits: Provided, That the same shall not apply to a case where such directors prove that thestocks are acquired and retired in excess of the limits despite their reasonable care. <AmendedJan. 29, 2004>

[This Article Newly Inserted by Act No. 6423, Mar. 28, 2001]

Article 189-2 (Acquisition of Treasury Stocks)

(1) Any stock-listed corporation or any KOSDAQ registered corporation shall acquire treasury stocks(excluding the acquisition under the provisions of Article 341 of the Commercial Act) in a mannerfalling under any of the following subparagraphs under its name and for its own account. In thiscase, the acquisition amount shall be within the limit of allowing any dividend in accordance withthe provisions of Article 462 (1) of the Commercial Act: <Amended by Act No. 6176, Jan. 21,2000; Act No. 6423, Mar. 28, 2001; Jan. 29, 2004; Dec. 29, 2005>

1. A manner in which the acquisition is made on the securities market or KOSDAQ;

2. A manner in which the open purchase is made in accordance with the provisions of Chapter IV; or

3. A manner in which the stocks are returned from a trustee that has acquired the stocks under atrust agreement in accordance with Article 189-2(2) upon termination or expiration of the trustagreement; provided that the trustee shall have acquired the stocks in accordance with Subparagraph1 or 2 above.

(2) Where a stock-listed corporation or a KOSDAQ registered corporation acquires treasurysecurities through money trust contract as determined by the Presidential Decree, an amountcalculated according to what is prescribed by the Presidential Decree shall be deemed theacquisition amount as described in the provisions of the later part of paragraph (1). <Amendedby Act No. 6176, Jan. 21, 2000; Jan. 29, 2004>

(3) Where a stock-listed corporation or a KOSDAQ registered corporation acquires the treasurystocks (including the conclusion of a trust contract, etc.; hereafter the same in this Articleshall apply) pursuant to paragraphs (1) and (2) or intends to dispose of the treasury stocksacquired pursuant to paragraphs (1) and (2) (including the cancellation of a trust contract, etc.;hereafter the same in this Article shall apply), it shall report the matters relating to theacquisition or disposal of treasury stocks to the Financial Supervisory Commission and the KoreaExchange according to the criteria as prescribed by the Presidential Decree, such as necessaryconditions and procedure, etc. <Amended by Act No. 5254, Jan. 13, 1997; Act No. 5498, Jan. 8,1998; Act No. 5521, Feb. 24, 1998; Act No. 5736, Feb. 1, 1999; Act No. 6423, Mar. 28, 2001; Jan.29, 2004>

(4) Where a stock-listed corporation or a KOSDAQ registered corporation acquires the treasurystocks in excess of the limit as referred to in paragraph (1) due to a reduction of the limit todistribute the dividend, the stock-listed corporation shall dispose of the excessive portion withinsuch period as determined by the Presidential Decree from that day. <Amended by Act No. 5254,Jan. 13, 1997; Act No. 5539, May 25, 1998; Act No. 5736, Feb. 1, 1999; Act No. 6423, Mar. 28, 2001;Jan. 29, 2004>

(1) A stock-listed corporation or KOSDAQ registered corporation may issue new stocks by publicoffering as prescribed in the Presidential Decree by a resolution of the board of directors inaccordance with the articles of association of the corporation. <Amended by Act No. 5736, Feb.1, 1999; Jan. 29, 2004>

(2) In case where new stocks are issued by public offering pursuant to paragraph (1), the price ofthe new stocks shall not be less than the price calculated by the methods as prescribed by thePresidential Decree.

[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 189-4 (Stock Options)

(1) Notwithstanding the provisions of Articles 340-2 through 340-5 of the Commercial Act, anystock-listed corporation or any KOSDAQ registered corporation shall offer newly issued stocks atthe pre-set price to officers and employees of such corporation or its affiliated company asprescribed by the Presidential Decree (for the purpose of this Article, excluding any officer oremployee prescribed by the Presidential Decree) who have contributed or are able to contribute tothe establishment, management, overseas business, technological renovations, etc. of suchcorporation in compliance with a resolution (hereafter in this Article referred to as the specialresolution) adopted as prescribed by the articles of association in accordance with the provisionsof Article 434 of the Commercial Act and grant such officers and employees the right to purchaseits stocks (hereinafter referred to as the stock option) in accordance with the provisions ofthis Article under the conditions as prescribed by the Presidential Decree. <Amended by Act No.6176, Jan. 21, 2000; Act No. 6623, Jan. 26, 2002; Jan. 29, 2004; Dec. 29, 2005>

(2) Any stock-listed corporation or any KOSDAQ registered corporation (hereinafter referred to asthe stock option granting corporation) that intends to grant the stock option shall enter mattersfalling under each of the following subparagraphs in its articles of association: <Amended byAct No. 6176, Jan. 21, 2000; Jan. 29, 2004>

1. The fact that the corporation may grant the stock option in certain cases;

2. The types and total number of stocks to be issued through the exercise of the stock option;

3. The qualifications of a person who is to be granted the stock option; and

4. The fact that a corporation may cancel the stock option in certain cases.

(3) Any stock option granting corporation may, if there is a special resolution containing mattersfalling under each of the following subparagraphs, grant to officers and employees of suchcorporation or its affiliated company as provided in Article 189-4(1) (for the purpose of thisArticle, excluding any officer or employee prescribed by the Presidential Decree) stock option upto the limits prescribed by the Presidential Decree within the scope of 20/100 of the total numberof stocks issued: Provided, That notwithstanding paragraph (1) and the main sentence of thisparagraph, such corporation may offer such stock option up to the limits prescribed by thePresidential Decree within the scope of 10/100 of the total number of stocks issued according to aresolution that contains matters falling under each of the following subparagraphs and is adoptedby the board of directors as prescribed by the articles of association: <Amended by Act No.6423, Mar. 28, 2001; Dec. 29, 2005>

1. The names of persons who are to be granted the stock option;

2. The method of granting the stock option;

3. The matters concerning option prices of the stock option and adjustment thereof;

4. The period for which the stock option is exercised; and

5. The kinds and numbers of stocks to be offered by the exercise of the stock option to each ofpersons who are granted such stock option.

(4) Grant of stock options in accordance with the proviso of Article 189-4(3) shall require anapproval of the first general shareholders meeting to be held following the date of such grant.<Newly inserted Dec. 29, 2005>

(5) The stock option shall have the effect on a company that grants such stock option for a periodranging from the date of a resolution under paragraph (1) or the proviso of paragraph (3)

to the date on which the exercise of the stock option prescribed by the relevant corporation inthe articles of association expires. In this case, any person who is granted the stock option shallbe allowed to exercise such stock option only after holding office or serving for not less than twoyears from the date of a resolution under paragraph (1) or the proviso of paragraph (3) save thecase prescribed by the Ordinance of the Ministry of Finance and Economy. <Amended by Act No.6423, Mar. 28, 2001; Dec. 29, 2005>

(6) The stock option shall not be transferred to other persons: Provided, That when a person whohas been granted the stock option dies, a successor of the person shall be deemed to be grantedsuch option. <Amended by Act No. 6176, Jan. 21, 2000; Dec. 29, 2005>

(7) The provisions of Articles 340-3 (3) and 350 (2), the latter part of Article 350 (3), Articles351 and 516-8 (1), (3), and (4), and the former part of Article 516-9 of the Commercial Act shallapply mutatis mutandis to the cas in which new stocks are issued as a result of the exercise of thestock option. <Amended by Act No. 6176, Jan. 21, 2000; Dec. 29, 2005>

(8) A stock option granting corporation shall, when making a resolution pursuant to paragraph (1)or the proviso of paragraph (3) of this Article, report such fact to the Financial SupervisoryCommission and the Korea Exchange under the conditions as prescribed by the Presidential Decree,and the Financial Supervisory Commission and the Korea Exchange shall keep the content of suchresolution to make it available for public inspection during the period from the date of report tothe end of duration of stock option. <Amended by Act No. 5498, Jan. 8, 1998; Act No. 6176, Jan.21, 2000; Jan. 29, 2004; Dec. 29, 2005>

In the event that any corporation that is neither a stock-listed corporation nor a KOSDAQregistered corporation intends to merge with a stock-listed corporation or a KOSDAQ registeredcorporation, any approval therefor of a general meeting of stockholders under Article 522 of theCommercial Act shall not take effect unless it is made after two months from the date on which therelevant corporation has registered under Article 3. <Amended by Act No. 3541, Mar. 29, 1982;Act No. 5254, Jan. 13, 1997; Act No. 5521, Feb. 24, 1998; Act No. 5736, Feb. 1, 1999; Act No. 6423,Mar. 28, 2001; Jan. 29, 2004>

Article 190-2 (Merger, etc.)

(1) Any stock-listed corporation or any KOSDAQ registered corporation shall, where it intends tomerge with other corporations, report to the Financial Supervisory Commission and the KoreaExchange. In this case, the stock-listed corporation or KOSDAQ registered corporation shall reportthe matters relating to the merger according to standards for merger conditions such as therequirements and procedures as prescribed by the Presidential Decree. <Amended by Act No. 5736,Feb. 1, 1999; Act No. 6423, Mar. 28, 2001; Jan. 29, 2004>

(2) In the event that any stock-listed corporation or any KOSDAQ registered corporation falls underany case of the following subparagraphs, the provisions of paragraph (1) shall apply mutatismutandis thereto: <Amended by Act No. 7025, Dec. 31, 2003; Jan. 29, 2004>

1. Where it intends to acquire by transfer or transfer any important business or assets prescribedby the Presidential Decree;

2. Where it intends to execute a comprehensive swap or a comprehensive transfer of shares; and

3. Where it intends to split itself or merge with other corporation after splitting itself.

(1) A stockholder (including stockholders who have non-voting rights pursuant to Article 370 (1) ofthe Commercial Act; hereafter the same shall apply in this Article) who opposes a resolution madeat the meeting of the board of directors of a stock-listed corporation or a KOSDAQ registeredcorporation with regard to the matters under Articles 360-3, 360-9, 360-16, 374, 522, 527-2 and530-3 of the Commercial Act (limited to a merger by split-off referred to in Article 530-2 of thesaid Act) may demand of the corporation concerned the purchase of the stocks that he owns withintwenty days after the date on which such resolution is made at the general meeting of stockholders(after the date on which two weeks have passed since the public notice or notification referred toin Articles 360-9 (2) and 527-2 (2) of the Commercial Act for stockholders of a company to become acomplete subsidiary under Article 360-9 of the said Act and stockholders of a company to beextinguished under Article 527-2 of the said Act) by a written request in which class and number ofstocks are stated, only in case where he has made written notification that he opposes theresolution of the corporation concerned prior to the general meeting of stockholders (within twoweeks from the date on which a public notice or notification is made under Articles 360-9 (2) and527-2 (2) of the Commercial Act for stockholders of a company to become a complete subsidiary underArticle 360-9 of the same Act and stockholders of a company to be extinguished under Article 527-2of the same Act). <Amended by Act No. 4469, Dec. 31, 1991; Act No. 4701, Jan. 5, 1994; Act No.5254, Jan. 13, 1997; Act No. 5736, Feb. 1, 1999; Act No. 6423, Mar. 28, 2001; Act No. 6623, Jan.26, 2002; Jan. 29, 2004>

(2) A stock-listed corporation or a KOSDAQ registered corporation which has received a demandpursuant to paragraph (1) shall purchase the stocks concerned within one month after the expirationof the period for demand for purchase. <Amended by Act No. 5736, Feb. 1, 1999>

(3) The purchase price under paragraph (2) shall be determined by consultation between thestockholder concerned and the corporation concerned: Provided, That the purchase price shall, wherea purchase agreement has not been reached among them, be an amount calculated through the methodsas determined by the Presidential Decree based on transaction price of the stocks concerned tradedon the securities market or KOSDAQ prior to the date on which a resolution by the board ofdirectors is made, and where the corporation concerned or the

stockholders holding 30/100 or moreof total number of stocks subject to such purchase objectto this purchase price, the Financial Supervisory Commission may adjust it. In this case, anapplication for adjusting purchase price shall be made not later than ten days prior to the date onwhich such a purchase is to be finalized pursuant to paragraph (2). <Amended by Act No. 5498,Jan. 8, 1998; Act No. 5736, Feb. 1, 1999; Act No. 6423, Mar. 28, 2001; Jan. 29, 2004>

(4) Any stock-listed corporation or any KOSDAQ registered corporation shall, where it purchasesstocks pursuant to paragraph (1), dispose of them within a period as prescribed by the PresidentialDecree: Provided, That in the event that it is intended to retire stocks with dividends to beoffered to stockholders, such stocks shall be retired in accordance with Article 189 (excluding thelatter part other than each subparagraph of paragraph (2) of the same Article and paragraph (3) 1of the same Article). In this case, in the application of paragraph (2) 2 of the same Article, thetotal value of stocks to be acquired for retirement shall be read the total value of stocks to beretired, in the application of paragraph (2) 3 of the same Article, the period for which it isintended to acquire stocks. In this case, the period shall be read the date on which it isintended to retire stocks. In this case, the date, and in the application of paragraph (3) 2 ofthe same Article, the amount to be acquired for retirement shall be read the total value ofstocks to be retired, respectively. <Amended by Act No. 5254, Jan. 13, 1997; Act No. 6423, Mar.28, 2001; Jan. 29, 2004>

(5) Where any stock-listed corporation or any KOSDAQ registered corporation makes notification orpublic notice for the convocation of a general meeting of stockholders in order to resolve thematters prescribed in Articles 360-3, 360-16, 374, 522 and 530-3 of the Commercial Act (limited tomerger by split-off referred to in Article 530-2 of the said Act) or makes notification or publicnotice pursuant to Articles 360-9 (2) and 527-2 (2) of the same Act, under the conditions asprescribed by Article 363 of the same Act, it shall specify the contents and exercising methods ofappraisal rights of stockholders pursuant to paragraph (1). In this case, the stock-listedcorporation or KOSDAQ registered corporation shall notify stockholders having no voting rightspursuant to Article 370 (1) of the same Act or give a public notice thereof to them. <NewlyInserted by Act No. 3945, Nov. 28, 1987; Act No. 4701, Jan. 5, 1994; Act No. 5254, Jan. 13, 1997;Act No. 5736, Feb. 1, 1999; Act No. 6423, Mar. 28, 2001; Act No. 6623, Jan. 26, 2002; Jan. 29,2004>

[This Article Wholly Amended by Act No. 3541, Mar. 29, 1982]

Article 191-2 (Special Cases for Nonvoting Stocks)

(1) In applying the limit on the number of nonvoting stocks pursuant to Article 370 (2) of theCommercial Act, where a stock-listed corporation (including a corporation which makes a publicoffering of new or outstanding stocks for the purpose of listing them initially) or a KOSDAQregistered corporation (including a corporation which makes an initial public offering of stocks)falls under any of the following subparagraphs, the nonvoting stocks issued by such corporationshall not be counted in the calculation of the limit: <Amended by Act No. 5423, Dec. 13, 1997;Act No. 5498, Jan. 8, 1998; Act No. 5539, May 25, 1998; Act No. 5736, Feb. 1, 1999; Jan. 29,2004>

1. In case where such corporation issues stocks in a foreign country as prescribed by the Ordinanceof the Ministry of Finance and Economy or issues stocks as a result of the excercise of the rightsupon convertible bonds, bonds with warrants or any other certificates or instruments related tostocks issued in a foreign country; and

2. In case where a corporation which is deemed necessary to issue nonvoting stocks in the publicinterest by the Financial Supervisory Commission and satisfies the criteria as prescribed by thePresidential Decree from among corporations carrying on an industry important for the nationaleconomy, such as the national key industry, issues stocks.

(2) The aggregate number of nonvoting stocks falling under any subparagraph of paragraph (1) andthose pursuant to Article 370 (2) of the Commercial Act shall not exceed 1/2 of the total number ofissued and outstanding stocks.

(3) A corporation of which the total number of nonvoting stocks exceeds 1/4 of the total number ofissued and outstanding stocks may issue nonvoting stocks within the ratio, by means of exercisingpreemptive right, capitalization of reserve or stock dividend, etc., as determined by thePresidential Decree. <Amended by Act No. 5423, Dec. 13, 1997; Act No. 5539, May 25, 1998; ActNo. 6176, Jan. 21, 2000>

[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 191-3 (Special Treatment of Stock Dividend)

(1) Notwithstanding the proviso of Article 462-2 (1) of the Commercial Act, a stock-listedcorporation or KOSDAQ registered corporation may make a dividend by newly issued stocks up to thelimit of the total amount of dividend: Provided, That in case where the current price of concernedstock is less than par value thereof, the same shall not apply. <Amended by Act No. 5736, Feb.1, 1999; Jan. 29, 2004>

(2) The method calculating the price of stock pursuant to the proviso of paragraph (1) shall beprescribed by the Presidential Decree.

[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 191-4 (Issuance of New Type Corporate Bonds)

(1) A stock-listed corporation or KOSDAQ registered corporation may issue new type of bonds whichare different from those under Articles 513 (1) and 516-2 (1) of the Commercial Act, such as bondsentitled to participate in dividend, bonds with rights to demand an exchange with stocks or othersecurities, or other bonds as prescribed by the Presidential Decree. <Amended by Act No. 5736,Feb. 1, 1999; Jan. 29, 2004>

(2) Necessary matters such as contents and issuance method of bonds issued pursuant to theprovisions of paragraph (1) shall be prescribed by the Presidential Decree.

[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 191-5 (Special Treatment of Issuance of Bonds)

The amount corresponding to the portion with respect to which the conversion to stocks or theexercise of preemptive right is possible, of convertible bonds or bonds with warrants which areissued by a stock-listed corporation or KOSDAQ registered corporation, shall not be subject to thelimits of the issuance of bonds pursuant to the provisions of Article 470 of the Commercial Act.<Amended by Act No. 5736, Feb. 1, 1999; Jan. 29, 2004>

[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 191-6 (Special Treatment of Dividend by Public Corporation)

(1) In paying dividend of profits or interests, a public corporation (this refers to a publiccorporation pursuant to the provisions of Article 199 (2)) may, notwithstanding the provisions ofArticle 464 of the Commercial Act, pay all or part of dividend to which the Government is entitledto persons who fall under any of the following subparagraphs from among stockholders of theconcerned corporation under the conditions as prescribed by the Presidential Decree:

1. Employees who are members of an employee stock ownership association of the corporation whichissued the stocks concerned; and

2. Any person as prescribed by the Presidential Decree, taking into consideration a level of yearlyincome and amount of property owned.

(2) In capitalizing all or a part of reserve, a public corporation may, notwithstanding theprovisions of Article 461 (2) of the Commercial Act, issue stocks to which the Government isentitled in whole or in part, to stockholders who hold stocks issued by the public corporation fora period as prescribed by the Presidential Decree.

(1) In case where a stock-listed corporation or a corporation which intends to list stocks publiclyoffers or sells its stocks, member of employee stock ownership association of such corporationshall have the right to be allocated preferentially with stocks within the limit of 20/100 of thetotal number of stocks to be offered or sold: Provided, That in case where it falls under any ofthe following subparagraphs, this shall not apply: <Amended by Act No. 5559, Sep. 16, 1998>

1. A case where a corporation as prescribed by the Presidential Decree from among foreign-investedenterprises pursuant to the Foreign Investment Promotion Act issues stocks; and

2. Other case prescribed by the Presidential Decree as the case where preferential allocation tomember of employee stock ownership association is difficult.

(2) In case where the number of stocks owned by members of employee stock ownershipassociation is more than 20/100 of the total number of stocks issued newly and stocks to have beenissued already, paragraph (1) shall not apply.

(3) The Minister of Finance and Economy may determine the criteria necessary for the stock dividendfor member of employee stock ownership association pursuant to paragraph (1) and for the disposalof such stocks. <Amended by Act No. 5539, May 25, 1998>

[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 191-8 (Payment of Deposit with Listed Securities, etc.)

(1) Deposit or deposit money as prescribed by the Presidential Decree from among those which are tobe paid to the State, a local government or a government-invested institution pursuant to theFramework Act on the Management of Government-Invested Institutions (hereinafter referred to as agovernment-invested institution) may be paid with listed securities (including securitiesregistered with KOSDAQ; hereafter the same shall apply in this Article). <Amended by Act No.5736, Feb. 1, 1999; Jan. 29, 2004>

(2) The State, a local government or a government-invested institution may not refuse the paymentwith listed securities pursuant to paragraph (1).

(3) The listed securities which are eligible for a payment to the State, local government orgovernment-invested institution pursuant to paragraph (1) and the valuation standard of suchsecurities, shall be prescribed by the Presidential Decree.

[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 191-9

Deleted. <by Act No. 6176, Jan. 21, 2000>

Article 191-10 (Public Notice on Convocation of General Meeting)

(1) In case where a stock-listed corporation or KOSDAQ registered corporation convenes ageneral meeting of stockholders, with respect to stockholders who hold stocks not more than thenumber as prescribed by the Presidential Decree, the notice of convocation pursuant to Article 363(1) of the Commercial Act may be substituted by determining the date of a general meeting ofstockholders under the conditions as prescribed by the articles of association of the corporationand giving twice or more public notices to the effect that the such corporation convenes thegeneral meeting of stockholders and the subject matters of that meeting on two or more dailynewspapers not later than two weeks before the date of the general meeting of stockholders.<Amended by Act No. 5736, Feb. 1, 1999; Jan. 29, 2004>

(2) In the event that any stock-listed corporation or any KOSDAQ registered corporation serves aconvocation notice to each of the stockholders under Article 363 (1) of the Commercial Act or makesthe public notice thereof under paragraph (1) for the purpose of holding a general meeting ofstockholders to select and appoint directors, such stock-listed corporation or such KOSDAQregistered corporation shall notify each of the stockholders of names and brief personal records ofcandidates for such directors, persons who recommend such candidates and other matters concerningsuch candidates prescribed by the Presidential Decree or publish them. <Amended by Act No. 6423,Mar. 28, 2001; Jan. 29, 2004>

(3) In the event that any stock-listed corporation or any KOSDAQ registered corporation serves theconvocation notice of a general meeting of stockholders on each of the stockholders or makes apublic notice thereof, such stock-listed corporation or such KOSDAQ registered corporation shallnotify each of the stockholders of matters falling under each of the following subparagraphs orpublish such matters: Provided, That the stock-listed corporation or the KOSDAQ registeredcorporation may run such matters on the information communications network and offer such mattersfor public perusal in places prescribed by the Ordinance of the Ministry of Finance and Economy inlieu of the notice and publication: <Newly Inserted by Act No. 6423, Mar. 28, 2001; Jan. 29,2004>

1. Matters concerning the attendance rates of outside directors and other non-standing directors atmeetings of board of directors, details of their activities such as pros and cons over the agendasof meetings of the board of directors and their remunerations;

2. Matters prescribed by the Presidential Decree from among details of transactions with the biggeststockholder, etc. under Article 191-19; and

3. Management reference matters prescribed by the Presidential Decree such as the outline ofthe business, current operations.

[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 191-11 (Appointment and Dismissal of Auditor)

(1) In case where the total number of voting stocks of a stock-listed corporation or KOSDAQregistered corporation owned by the biggest stockholder and his specially related persons and/orother persons as prescribed by the Presidential Decree exceeds 3/100 of the total number of issuedvoting stocks of such corporation (in case where the articles of association of the corporationdesignates a ratio lower than 3/100, such ratio shall apply), such stockholders shall not exercisethe voting rights of stocks exceeding the ratio in case of the appointment or dismissal of anauditor or a member of the inspection committee (limited to any member who is not an outsidedirector). <Amended by Act No. 5736, Feb. 1, 1999; Act No. 6176, Jan. 21, 2000; Jan. 29,2004>

(2) A stock-listed corporation or KOSDAQ registered corporation shall, in case where it proposesthe appointment of an auditor or the determination of remuneration for auditor as the subjectmatter of the general meeting of stockholders, propose and resolve that subject matter separatelyfrom the appointment of director or for the determination of remuneration for director. <Amendedby Act No. 5736, Feb. 1, 1999; Jan. 29, 2004>

(3) The auditor or inspection committee of a stock-listed corporation or KOSDAQ registeredcorporation may, notwithstanding Article 447-4 (1) of the Commercial Act, submit an auditing reportto directors not later than one week before the date of the general meeting of stockholders.<Amended by Act No. 5736, Feb. 1, 1999; Act No. 6176, Jan. 21, 2000; Jan. 29, 2004>

[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 191-12 (Qualifications for Auditor)

(1) A stock-listed corporation or KOSDAQ registered corporation as prescribed by the

Presidential Decree, shall appoint one or more standing auditors: Provided, That the same shallnot apply to the case in which the inspection committee is established in accordance with this Actor other Acts. <Amended by Act No. 5736, Feb. 1, 1999; Act No. 6176, Jan. 21, 2000; Jan. 29,2004>

(2) Deleted. <by Act No. 5736, Feb. 1, 1999>

(3) A person who falls under any of the following subparagraphs shall not be a standing auditor ofa stock-listed corporation or KOSDAQ registered corporation, and any auditor of a stock-listedcorporation who falls under any of the following subparagraphs shall lose his office: <Amendedby Act No. 5736, Feb. 1, 1999; Jan. 29, 2004; Mar. 31, 2005>

1. A minor, an incompetent, or a quasi-incompetent;

2. A person who is declared bankrupt has not been reinstated yet;

3. A person who has been sentenced to imprisonment without prison labor or a heavier punishment andfor whom two years has not elapsed since the execution of such punishment was terminated or sincethe final judgment was rendered that the punishment on him would not be executed;

4. A person who was discharged or dismissed from a stock-listed corporation or KOSDAQ registeredcorporation under this Act and for whom two years has not elapsed since the date of such dischargeor dismissal;

5. A major stockholder of the corporation concerned;

6. A full-time officer or employee of the corporation concerned or a person who has been a full-timeofficer or employee thereof in the last two years; and

7. A person who is capable of having influence on the management of the corporation concerned otherthan those under subparagraphs 5 and 6 and who is prescribed by the Presidential Decree.

[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 191-13 (Exercise of Minority Stockholders Rights)

(1) Any person who has been holding 1/10,000 or more of the total number of outstanding stocksissued by a stock-listed corporation or a KOSDAQ registered corporation for six months under theconditions as prescribed by the Presidential Decree may exercise his right as a stockholderprescribed in Article 403 of the Commercial Act (including where it is applicable mutatis mutandisunder Articles 324, 415, 424-2, 467-2, and 542 of the Commercial Act). <Amended by Act No. 5539,May 25, 1998; Act No. 5736, Feb. 1, 1999; Jan. 29, 2004>

(2) Any person who has been holding 50/100,000 or more (in case of a corporation prescribed by thePresidential Decree, 25/100,000 or more) of the total number of outstanding stocks issued by astock-listed corporation or a KOSDAQ registered corporation for 6 months under the conditions asprescribed by the Presidential Decree may exercise his right as a stockholder prescribed in Article402 of the Commercial Act. <Amended by Act No. 6423, Mar. 28, 2001; Jan. 29, 2004>

(3) Any person who has been holding 10/10,000 or more (in case of a corporation prescribed by thePresidential Decree, 5/10,000 or more) of the total number of outstanding stocks issued by astock-listed corporation or a KOSDAQ registered corporation for 6 months under the conditions asprescribed by the Presidential Decree may exercise his right as a stockholder under Article 466 ofthe Commercial Act. <Amended by Act No. 5736, Feb. 1, 1999; Act No. 6423, Mar. 28, 2001; Jan.29, 2004>

(4) Any person who has been holding stocks 50/10,000 or more (in case of a corporation prescribedby the Presidential Decree, 25/10,000 or more) of the total number of outstanding stocks issued bya stock-listed corporation or a KOSDAQ registered corporation for 6 months under the conditions asprescribed by the Presidential Decree may exercise his right as a stockholder under Articles 385(including a case where it is applicable mutatis mutandis in Article 415 of the Commercial Act) and539 of the Commercial Act. <Newly Inserted by Act No. 6423, Mar. 28, 2001; Jan. 29, 2004>

(5) Any person who has been holding 30/1000 or more (in case of a corporation as prescribed by thePresidential Decree, 15/1000 or more) of the total number of outstanding stocks issued by astock-listed corporation or a KOSDAQ registered corporation for six months under the conditions asprescribed by the Presidential Decree may exercise his right as a stockholder

prescribed in Articles 366 and 467 of the Commercial Act. In this case, when a person exerciseshis right as a stockholder prescribed in Article 366 of the Commercial Act, the number of stocksshall be calculated based on voting stocks. <Amended by Act No. 5736, Feb. 1, 1999; Jan. 29,2004>

(6) When a stockholder pursuant to paragraph (1) of this Article institutes a lawsuit as prescribedin Article 403 of the Commercial Act (including where it is applicable mutatis mutandis underArticles 324, 415, 424-2, 467-2 and 542 of the Commercial Act) and wins such lawsuit, thestockholder may request the company concerned to pay the cost of the lawsuit and other costsresulting from such lawsuit.

[This Article Wholly Amended by Act No. 5521, Feb. 24, 1998]

Article 191-14 (Stockholders Proposal)

(1) A person who has been holding 10/1000 or more (in case of a corporation as prescribed by thePresidential Decree, 5/1000 or more) of the total number of issued and outstanding stocks of astock-listed corporation or KOSDAQ registered corporation for six months under the PresidentialDecree, may propose to the directors that such directors make certain matters as the subjectmatters of the general meeting of stockholders under the conditions as prescribed by thePresidential Decree (hereinafter referred to as a stockholders proposal). <Amended by Act No.5736, Feb. 1, 1999; Jan. 29, 2004>

(2) Any person who makes a stockholders proposal pursuant to the provisions of paragraph (1) mayask directors to enter the summary of his proposal in a publication and a notice thereof inaccordance with the provisions of Article 363 of the Commercial Act in addition to matters to beput on the agenda of a general meeting of stockholders on the conditions as prescribed by thePresidential Decree. <Newly Inserted by Act No. 6176, Jan. 21, 2000>

(3) The board of directors shall submit stockholders proposal before the general meeting ofstockholders as the subject matters thereof, except in the case where the contents of thestockholders proposal violate Acts and subordinate statutes or the articles of association or inthe case as prescribed by the Presidential Decree, and in case where there is a demand of a personwho makes stockholders proposal, the board of directors shall give him an opportunity to explainthe concerned proposal in the general meeting of stockholders.

[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 191-15 (Special Cases for Issuance below Par Value)

(1) Notwithstanding the provisions of Article 417 of the Commercial Act, any stock-listedcorporation or any KOSDAQ registered corporation may issue stocks below par value subject to aresolution of the general meeting of stockholders under Article 434 of the Commercial Act withoutauthorization of a court: Provided, That this shall not apply where the corporation concerned failsto complete a redemption under Article 455 (2) of the Commercial Act. <Amended by Act No. 6423,Mar. 28, 2001; Jan. 29, 2004>

(2) The minimum issue value for stocks shall be determined by a resolution of the general meetingof stockholders under paragraph (1). In this case, the minimum issue value shall not be lower thanprice calculated according to the methods as determined by the Presidential Decree.

(3) Except as otherwise determined by the general meeting of stockholders, stocks under paragraph(1) shall be issued within one month from the date on which a resolution of the general meeting ofstockholders is made.

[This Article Newly Inserted by Act No. 5736, Feb. 1, 1999]

Article 191-16 (Appointments of Outside Directors)

(1) Any stock-listed corporation or any KOSDAQ registered corporation prescribed by thePresidential Decree shall make the number of outside directors not less than one fourth of totalnumber of its directors: Provided, That any stock-listed corporation or any KOSDAQ registeredcorporation prescribed by the Presidential Decree shall have not less than three outside directors,but make the number of such outside directors not less than a majority of the total number of itsdirectors. <Amended by Act No. 6423, Mar. 28, 2001; Act No. 7025, Dec. 31, 2003; Jan. 29,2004>

(2) The provisions of paragraph (1) shall not apply to any stock-listed corporation or any KOSDAQregistered corporation that is a mutual fund incorporated pursuant to the Mutual Fund

Act and any other stock-listed corporation or any other KOSDAQ registered corporationprescribed by the Presidential Decree. <Amended by Act No. 6423, Mar. 28, 2001; Jan. 29,2004>

(3) The provisions of Article 54-5 (4) and (5) shall apply mutatis mutandis to any outside directorof a stock-listed corporation or a KOSDAQ registered corporation referred to in paragraph (1) andthe provisions of Article 54-5 (2) and (3) shall apply mutatis mutandis to the stock-listedcorporation or the KOSDAQ registered corporation referred to in the proviso of paragraph (1).<Amended by Act No. 6423, Mar. 28, 2001; Jan. 29, 2004>

(4) Any non-standing or outside director appointed under the Act on the Improvement of ManagerialStructure and Privatization of Public Enterprises, the Banking Act and other Acts shall be deemedan outside director appointed under this Act.

(5) Any director of a stock-listed corporation or a KOSDAQ registered corporation may seekassistance from experts at the expense of his company according to a resolution of the board ofdirectors. <Newly Inserted by Act No. 6423, Mar. 28, 2001; Jan. 29, 2004>

(6) Where any stock-listed corporation or any KOSDAQ registered corporation appoints any outsidedirector or dismisses him or any outside director resigns prior to the expiration of his term ofoffice, such stock-listed corporation or such KOSDAQ registered corporation shall file a reportthereof with the Financial Supervisory Commission and the Korea Exchange by the day following theday on which such appointment, dismissal or resignation occurs. <Amended by Act No. 6423, Mar.28, 2001; Jan. 29, 2004>

(1) In the event that a general meeting of stockholders is called for the purpose of selecting andappointing not less than two directors, notwithstanding Article 382-2 (1) of the Commercial Act,any stockholder holding stocks equivalent to not less than 1/100 of the total number of stocksissued, with the exception of non-voting stocks of any stock-listed corporation or any KOSDAQregistered corporation under the proviso of Article 191-16 (1), may apply to the relevantcorporation for selecting and appointing such directors in a cumulative vote manner, except asotherwise provided for in the articles of association. <Amended Jan. 29, 2004>

(2) In the event that any stock-listed corporation or any KOSDAQ registered corporation referred toin paragraph (1) intends to preclude the cumulative vote in the articles of association or tochange the articles of association for such preclusion, any stockholder holding stocks in excess of3/100 (if the percentage is set lower than it by the articles of association, such percentage shallbe applied) of the total number of stocks issued, with the exception of non-voting stocks, shall beprohibited from exercising his voting right on the stocks held in excess. <Amended Jan. 29,2004>

(3) In the event that any stock-listed corporation or any KOSDAQ registered corporation referred toin paragraph (1) intends to put on the agenda of a general meeting of stockholders the question ofwhether to change the articles of association for precluding the cumulative vote referred to inparagraph (2), such stock-listed corporation or such KOSDAQ registered corporation shall put suchquestion on the agenda separately from other agenda relating to a change in the articles ofassociation for other matters and resolve on changing the articles of association. <Amended Jan.29, 2004>

[This Article Newly Inserted by Act No. 6423, Mar. 28, 2001]

Article 191-19 (Transactions with Major Stockholders, etc. and Interested Persons of Stock-ListedCorporation and KOSDAQ registered corporation)

(1) Any stock-listed corporation or any KOSDAQ registered corporation shall be prohibited fromperforming the act falling under any of the following subparagraphs for its major stockholders(including specially-related persons), directors (including any person falling under eachsubparagraph of Article 401-2 (1) of the Commercial Act; hereafter the same in this paragraph shallapply) or auditors (including members of the inspection committee; hereafter the same in thisparagraph shall apply) or such stockholders, directors or auditors shall not act as the otherparties of such corporation: Provided, That the same shall not apply to the case of each item ofsubparagraph 2: <Newly Inserted by Act No. 7025, Dec. 31, 2003; Jan. 29, 2004>

1. Prohibited act:

(a) The act of renting any property that carries the economic value such as money, securities,actual asset and incorporeal asset right;

(b) The act of offering immovable property, movable property, securities and other property insecurity; or

(c) The act of guaranteeing the fulfillment of obligation; and

2. Exception of prohibited act:

(a) The act of lending money, etc. to directors and auditors for their welfare, which is prescribedby the Presidential Decree;

(b) The act of giving credits, which is permitted in other finance-related Acts and subordinatestatutes; or

(c) The act of loaning money, etc., which is prescribed by the Presidential Decree.

(2) In the event that any corporation prescribed by the Presidential Decree from among stock-listedcorporations and KOSDAQ registered corporations intends to execute transactions (excluding thetransactions prohibited in paragraph (1)) falling under any of the following subparagraphs with thebiggest stockholder (including any person specially related to him) of such corporation and anyspecially related person, such corporation shall obtain approval therefor from the board ofdirectors and report matters prescribed by the Presidential Decree in

connection with such transactions to a regular general meeting of stockholders called for thefirst time after the board of directors resolves on such approval: <Amended by Act No. 7025,Dec. 31, 2003>

1. The scale of the single transaction runs in excess of the scale prescribed by the PresidentialDecree in terms of the total amount of assets or the total amount of sales; and

2.The total amount of the transactions executed with a specified person during the current businessyear runs in excess of the scale prescribed by the Presidential Decree.

(3) Notwithstanding the provisions of paragraph (2), any transactions falling under any of thefollowing subparagraphs, including the normal transactions executed according to the business lineof the relevant corporation, may be carried out without obtaining approval therefor from the boardof directors and details of the transaction falling under subparagraph 2 shall not be required tobe reported to a general meeting of stockholders: <Amended by Act No. 7025, Dec. 31, 2003>

1. In the event that the relevant corporation is a financial institution, the transaction that isordinarily executed according to the contractual terms and conditions under Article 11-2 (4) of theMonopoly Regulation and Fair Trade Act and in conformity with the standards prescribed by thePresidential Decree; and

2. The transaction that is executed within the total amount approved by the board of directors.

(1) The Financial Supervisory Commission may, for the protection of investors and the establishmentof a fair transaction order, prescribe the standards for financial management of any stock-listedcorporation or any KOSDAQ registered corporation and may give necessary recommendation, withrespect to the matters falling under any of the following subparagraphs on the conditions asprescribed by the Presidential Decree: <Amended by Act No. 5254, Jan. 13, 1997; Act No. 5498,Jan. 8, 1998; Act No. 6176, Jan. 21, 2000; Jan. 29, 2004>

1. Matters relating to requirements for paid-in capital increase;

2. Matters relating to reserves for improvement of financial structure;

3. Matters relating to dividend;

4. Matters relating to the issue of oversea securities prescribed by the Presidential Decree; and

5. Other matters that are corresponding to subparagraphs 1 through 4 and prescribed by thePresidential Decree.

(1) Any stock-listed corporation or any KOSDAQ registered corporation which sets the term for thesettlement of accounts as once per year may pay profit dividends in money (hereinafter referred toas quarterly dividends) through a resolution of the board of directors to the stockholders on thelast day of March, June and September from the date on which the business year commences under theconditions as determined by the articles of incorporation. <Amended by Act No. 5591, Dec. 28,1998; Act No. 7025, Dec. 31, 2003; Jan. 29, 2004>

(2) A resolution of the board of directors described in paragraph (1) shall be made not later than45 days after the last day referred to in paragraph (1). <Amended by Act No. 7025, Dec. 31,2003>

(3) The quarterly dividends referred to in paragraph (1) shall be paid not later than 20 days afterthe date on which a resolution of the board of directors has been made: Provided, That this shall

not apply in case where the articles of association otherwise provide the time of paying thequarterly dividends. <Amended by Act No. 7025, Dec. 31, 2003>

(4) The quarterly dividends shall be within the limit of the amount obtained by deducting thefollowing from the amount of net property in a balance sheet in the immediately preceding term forthe settlement of accounts: <Amended by Act No. 7025, Dec. 31, 2003>

1. The amount of capital in the immediately preceding term for the settlement of accounts;

2. The total amount of capital surplus reserve and the total amount of earned surplus reserveaccumulated until the immediately preceding term for the settlement of accounts;

3. The amount determined to pay profits at a regular general meeting of stockholders in theimmediately preceding term for the settlement of accounts; and

4. The earned surplus reserve to be accumulated in the term for the settlement of accounts pursuantto quarterly dividends.

(5) Where the amount of net property in a balance sheet in the term for the settlement of accountsis likely to fall short of the total amount listed in subparagraphs of Article 462 (1) of theCommercial Act, no quarterly dividends shall be paid. <Amended by Act No. 7025, Dec. 31,2003>

(6) Where the amount of net property in a balance sheet in the term for settlement of accountsfalls short of the total amount listed in subparagraphs of Article 462 (1) of the Commercial Act,any directors who voted for a resolution of quarterly dividends made by the board of directorsshall be liable to compensate for the difference (where the total amount of the quarterly dividendsis smaller than the difference, the total amount of the quarterly dividends) jointly and severallyagainst the corporation: Provided, That this shall not apply in case where the director concernedhas proved that he could not know that there was a concern listed in paragraph (5) even though hehad paid considerable attention to it. <Amended by Act No. 7025, Dec. 31, 2003>

and 464 and subparagraph 3 of Article 625 of the Commercial Act, the quarterlydividends shallbe deemed profit dividends referred to in Article 462 (1) of the Commercial Act, in applying theprovisions of Article 350 (3) of the Commercial Act, a given date listed in paragraph (1) shall bedeemed the last day of a business year, and in applying the provisions of Article 635 (1) 22-2 ofthe Commercial Act, the period listed in paragraph (3) shall be the period listed in Article 464-2(1) of the Commercial Act. <Amended by Act No. 7025, Dec. 31, 2003>

(8) The provisions of Articles 399 (3) and 400 of the Commercial Act shall apply mutatis mutandiswhere directors bear joint and several liability pursuant to paragraph (6) and the provisions ofArticle 462 (2) and (3) of the Commercial Act shall apply mutatis mutandis where quarterlydividends are paid in violation of paragraph (4). <Amended by Act No. 7025, Dec. 31, 2003>

[This Article Newly Inserted by Act No. 5423, Dec. 13, 1997]

Article 193 (Measures against Listed Corporation, etc.)

If any listed corporation or KOSDAQ registered corporation violates this Act, orders andregulations pursuant to this Act or orders of the Financial Supervisory Commission, the FinancialSupervisory Commission may recommend the general meeting of stockholders of such corporation todischarge officers concerned, or may set restrictions on issuance of securities for a fixed periodof time or take such measures as prescribed by the Presidential Decree. <Amended by Act No.5254, Jan. 13, 1997; Act No. 5498, Jan. 8, 1998; Jan. 29, 2004>

In case where a registration statement, a report, or other documents or data, etc. are to be filedwith the Financial Supervisory Commission and the Securities Futures Commission, or the KoreaExchange pursuant to this Act, such submission may be executed by digitally recorded document underthe conditions as prescribed by the Presidential Decree. <Amended by Act No. 5498, Jan. 8, 1998;Jan. 29, 2004>

[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 194-3 (Audit Certification by External Auditor)

(1) A person as prescribed by the Presidential Decree from among persons who files documentsconcerning finance with the Financial Supervisory Commission and the Korea Exchange pursuant tothis Act, shall be audited with regard to financial accounting in accordance with the Act onExternal Audit of Stock Companies: Provided, That in case where the Presidential Decree prescribes,the same shall not apply. <Amended by Act No. 5498, Jan. 8, 1998; Jan. 29, 2004>

(2) The Financial Supervisory Commission may, if deemed necessary in the public interest or for theprotection of investors, request an external auditor pursuant to the Act on External Audit of StockCompanies who audited with regard to financial accounting pursuant to paragraph (1) (hereinafterreferred to as an external auditor) or a corporation which is audited, to submit data and toreport, and may take other necessary measures to such external auditor and corporation. <Amendedby Act No. 5498, Jan. 8, 1998>

(3) In case where a foreign corporation, etc. has been audited with respect to financial accountingto the foreign securities Acts and subordinate statutes, and when the audit meets the standards asprescribed by the Presidential Decree, it shall be considered that the foreign corporation, etc.has been audited pursuant to paragraph (1).

Article 199 (Restriction on Solicitation for Exercise of Voting Rights as Proxy)

(1) No one shall make solicitation for exercise of voting rights either by himself or by otherpersons as proxy with respect to listed stocks or stocks registered with KOSDAQ, in violation ofthe provisions of the Presidential Decree. <Amended by Act No. 5736, Feb. 1, 1999; Jan. 29,2004>

(2) In case of a listed corporation, KOSDAQ registered corporation, or registered corporation whichis prescribed by the Presidential Decree as corporations carrying on an industry important for thenational economy, such as the national key industry, etc. (hereinafter referred to as a publiccorporation), only such public corporation may solicit for exercise of voting rights of its stocksas proxy under the conditions as prescribed by the Presidential Decree. <Newly Inserted by ActNo. 3945, Nov. 28, 1987; Jan. 29, 2004>

Article 200 (Restriction, etc. on Ownership of Stocks Issued by Public Corporation)

(1) No one shall own, for his own account regardless of the title thereof, stocks issued by apublic corporation in excess of the criteria prescribed in the following subparagraphs. In thiscase, nonvoting stocks shall not be counted in the total number of issued and outstanding stocks,and stocks owned in the names of specially related persons shall be regarded as those owned for hisaccount: <Amended by Act No. 3541, Mar. 29, 1982; Act No. 3945, Nov. 28, 1987; Act No. 4469,Dec. 31, 1991; Act No. 4701, Jan. 5, 1994; Act No. 5254, Jan. 13, 1997; Act No. 5498, Jan. 8,1998>

1. The rate of ownership at the time of registration of securities concerned with the FinancialSupervisory Commission pursuant to Article 3, in case of stockholders who owned 10/100 or more ofthe total number of issued and outstanding stocks at such time; and

2. The rate as determined by the articles of association within the limit of 3/100 of the totalnumber of issued and outstanding stocks, in case of persons other than stockholders pursuant tosubparagraph 1.

(2) Notwithstanding the provisions of paragraph (1), if any person obtains the approval by theFinancial Supervisory Commission on the rate limit of ownership, he may own the stocks issued by apublic corporation up to such limit. <Amended by Act No. 4701, Jan. 5, 1994; Act No. 5498, Jan.8, 1998>

(3) Any person whose beneficial ownership is in excess of the criteria referred to in paragraphs(1) and (2) shall not exercise voting rights on the stocks in excess, and the Financial SupervisoryCommission may order such person to rectify his stock holding position so as to comply with thecriteria concerned. <Newly Inserted by Act No. 3541, Mar. 29, 1982; Act No. 5498, Jan. 8,1998>

Article 200-2 (Report on Mass Holding, etc. of Stocks)

(1) Any person (excluding those who are prescribed by the Presidential Decree) who holdsstocks, etc. of a stock-listed corporation or KOSDAQ registered corporation in large quantities(this refers to such case where the number of the stocks, etc. owned by the person himself andspecially related person is 5/100 or more of the total number of such stocks, etc.), shall reportthe situation of his holdings and the purpose thereof (whether the holding purports to affect themanagement of the issuer) to the Financial Supervisory Commission and the Korea Exchange, withinfive days (the day as prescribed by the Presidential Decree shall not be counted therein; hereafterthe same shall apply in this Paragraph, Article 200-2(4) and 200-3(2)) from the day on which hecomes to hold such stocks, etc., under the conditions as prescribed by the Presidential Decree, andif the rate of his holding is changed in excess of 1/100 of the total number of the stocks, etc. ofsuch corporation (excluding such cases as prescribed by the Presidential Decree), he shall reportthe contents of such change to the Financial Supervisory Commission and the Korea Exchange, withinfive days after such change occurs, under the conditions as prescribed by the Presidential Decree.In such case, unless the holding purports to affect the management of the issuer, includingappointment, dismissal or suspension of officers, amendments to the articles of incorporationrelated to the board of directors and other corporate units and others prescribed by thePresidential Decree, and with respect to the institutional investors, etc. as prescribed by thePresidential Decree, the time, contents, etc. of such report may be determined separately by thePresidential Decree. <Amended by Act No. 4701, Jan. 5, 1994; Act No. 5254, Jan. 13, 1997; ActNo. 5498, Jan. 8, 1998; Act No. 5539, May 25, 1998; Act No. 6176, Jan. 21, 2000; Jan. 29, 2004;Jan. 17, 2005>

(2) The provisions of Article 21 (4) shall apply mutatis mutandis with respect to the method ofcalculating the number and total number of stocks, etc. as prescribed in paragraph (1). <NewlyInserted by Act No. 5254, Jan. 13, 1997>

(3) In case where a report on the holding of stocks, etc. in large quantities and the purpose ofsuch holding or on a change therein is to be filed pursuant to paragraph (1), and another cause fora report occurs by the day immediately preceding the day on which the original report should befiled, such new change shall be reported together with the original cause to be reported. <NewlyInserted by Act No. 5254, Jan. 13, 1997; Jan. 17, 2005>

(4) The person filing the report in accordance with Article 200-2(1) shall file a report of anychange in the purpose of holding within 5 days to the Financial Supervisory Commission and theKorea Exchange. <Newly inserted Jan. 17, 2005>

(5) The Financial Supervisory Commission and the Korea Exchange shall keep the reports asreferred to in paragraphs (1) and (4) above and make them available for public inspection.<Amended by Act No. 5498, Jan. 8, 1998; Jan. 29, 2004; Jan. 17, 2005>

(6) If it is deemed necessary for protecting the public interest or investors, the FinancialSupervisory Commission may order the reporter as referred to in paragraph (1), the company whichhas issued the stocks, etc. and other interested persons to file any report or materials forreference, or have the FSS Governor investigate any accounting books, documents and other things.<Newly Inserted by Act No. 4701, Jan. 5, 1994; Act No. 5254, Jan. 13, 1997; Act No. 5498, Jan.8, 1998>

(7) Any person who conducts the investigation as referred to in paragraph (5), shall carry withhimself any certificate indicating his competence, and show it to any interested person. <NewlyInserted by Act No. 4701, Jan. 5, 1994; Act No. 5254, Jan. 13, 1997>

(1) Any person who fails to report or make a material false entry or omissions in the report on theholdings of stocks, etc. in large quantities and the purpose thereof or on a change therein(including the report on modification thereof) in violation of the provisions of Article 200-2 (1)and (3), may not exercise the voting rights with respect to stocks held in violation of theprovisions concerning report from among stocks held in excess of 5/100 of the total number ofissued and outstanding voting stocks during the period as prescribed by the Presidential Decree,and the Financial Supervisory Commission may order him to dispose of the violating portionconcerned. <Amended by Act No. 5498, Jan. 8, 1998; Jan. 17, 2005>

(2) Any person who has filed a report to the effect that the holding purports to affect themanagement of the issuer in accordance with Article 200-2(1), (3) and (4) shall not acquireadditional stocks of that issuer or exercise its voting rights in respect of the stocks held within5 days of the date of reporting <Newly inserted Jan. 17, 2005>[Newly inserted Jan. 13, 1997]

Article 200-4 (Provisions to Apply Mutatis Mutandis)

The provisions of Articles 11 (1) and (2) and 20 shall apply mutatis mutandis to the cases of thereport on the situation of mass holdings and the report on the change of the situation of massholdings. <Amended Jan. 17, 2005>

[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 201

Deleted. <by Act No. 3541, Mar. 29, 1982>

Articles 202 and 202-2

Deleted. <by Act No. 5498, Jan. 8, 1998>

Article 203 (Restrictions on Acquisition of Securities by Foreigners)

(1) Acquisition of securities by a foreigner or foreign corporation, etc. may be restricted by theprovisions of the Presidential Decree. <Amended by Act No. 3945, Nov. 28, 1987; Act No. 5254,Jan. 13, 1997>

(2) With respect to an acquisition of stocks of a public corporation by a foreigner or foreigncorporation, etc., it may be restricted separately under the conditions as prescribed by thearticles of association of the public corporation in addition to a restriction pursuant toparagraph (1). <Newly Inserted by Act No. 3945, Nov. 28, 1987; Act No. 5254, Jan. 13, 1997>

(3) Any person who has acquired stocks in contravention of the provisions of paragraph (1) or (2),may not exercise his voting rights to the stocks, and the Financial Supervisory Commission mayorder a correction to the person who acquired stocks in contravention of the provisions ofparagraph (1) or (2). <Newly Inserted by Act No. 3945, Nov. 28, 1987; Act No. 5498, Jan. 8,1998>

(4) Deleted. <by Act No. 5254, Jan. 13, 1997>

Articles 204 through 206

Deleted. <by Act No. 5498, Jan. 8, 1998>

Article 206-2 (Delegation of Authority)

(1) The Financial Supervisory Commission may delegate part of its authority under this Act to theSecurities Futures Commission under the conditions determined by the Presidential Decree.

(2) Where the Securities Futures Commission decides on the matters delegated pursuant to paragraph(1), it shall make a report thereon without delay to the Financial Supervisory Commission.

(3) Where it is deemed that a decision by the Securities Futures Commission referred to inparagraph (2) is illegal or extremely unjust in the light of the protection of the public interestor investors, the Financial Supervisory Commission may cancel whole or part of the decision orsuspend its execution.

(4) Matters under the authority of the Financial Supervisory Commission or the Securities FuturesCommission under this Act which require urgent disposition may be delegated to the Chairman of theFinancial Supervisory Commission or the Chairman of the Securities Futures Commission,respectively, and minor matters may be entrusted to the FSS Governor.

(1) Where there is a violation of this Act or an order under this Act or, a violation of theregulations of or an order under the Financial supervisory Commission, or where it is deemednecessary to protect public interest or investors, the Financial Supervisory Commission

(referring to the Securities Futures Commission in case of the matters in violation of Articles 188,188-2 and 188-4; hereafter in this Article the same shall apply) may order the person concerned tosubmit a report or materials for reference or have the FSS Governor investigate books, documents orother things.

(2) The Financial Supervisory Commission may demand the following matters from the personsconcerned in order to make an investigation referred to in paragraph (1):

1. Submission of a statement on the facts and situation with regard to matters to be invested;

2. Appearance for testimony pertaining to the matters to be invested; and

3. Submission of books, documents, or other things necessary for an investigation.

(3) In making investigation under paragraph (1), the Financial Supervisory Commission may take thefollowing measures if it is necessary to find out any violation of Articles 188, 188-2, and 188-4:<Newly Inserted by Act No. 6623, Jan. 26, 2002>

1. Provisional holding of books, documents, or other things submitted under paragraph (2) 3; and

2. Investigation into the business, books, documents, or other things through the entry into anoffice or workplace of the person concerned.

(4) Where it is deemed necessary to make an investigation referred to in paragraph (1), theFinancial Supervisory Commission may request a securities-related institution to submit documentsnecessary for the investigation under the conditions as determined by the Presidential Decree.

(5) Where a violation of this Act or an order under this Act, or a violation of the regulations ofor an order under the Financial Supervisory Commission has been proved as a result of aninvestigation referred to in paragraph (1), the Financial Supervisory Commission may make an orderfor correction or take other measures as determined by the Presidential Decree, and may determinethe procedures necessary for the investigation and taking measures, standards for measures andother necessary matters.

(6) Where the Korea Exchange has a suspicion that there is a violation of this Act or an order

under this Act or a violation of the regulations of or an order under the Financial SupervisoryCommission as a result of examination of an abnormal trade or supervision of its members, it shallnotify the Financial Supervisory Commission. <Amended by Act No. 6176, Jan. 21, 2000; Jan. 29,2004>

(7) Where it is deemed necessary to investigate any violation of Articles 188, 188-2, and 188-4(hereafter in this Article, referred to as the violation), the Securities Futures Commission mayorder a public official of the Financial Supervisory Commission as determined by the PresidentialDecree (hereinafter referred to as the investigating officer), to interrogate a person suspectedof the violation, seize things, or search a workplace. <Newly Inserted by Act No. 6623, Jan. 26,2002>

(8) Where an investigating officer conducts a search or seizure to investigate any violation, heshall carry a warrant for search or seizure issued by a judge upon a request of a publicprosecutor. <Newly Inserted by Act No. 6623, Jan. 26, 2002>

(10) The provisions of the Criminal Procedure Act concerning search and seizure, execution of awarrant for search or seizure, return of seized articles, etc. shall apply mutatis mutandis to thesearch and seizure and the warrant for search or seizure as provided in this Act. <NewlyInserted by Act No. 6623, Jan. 26, 2002>

(11) Where an investigating officer has conducted a provisional holding, interrogation, search, orseizure, he shall prepare a report thereon and add his signature and seal to it with an officialwatchman or interrogated person after confirmation of the report by such person. If such anofficial watchman or interrogated person fails or is unable to give any signature and seal, thereasons therefor shall be added. <Newly Inserted by Act No. 6623, Jan. 26, 2002>

(12) Where an investigating officer has completed the investigation into a violation, he shallreport the results thereof to the Securities Futures Commission. <Newly Inserted by Act No.6623, Jan. 26, 2002>

(2) Where the Financial Supervisory Commission intends to exchange information under paragraph (1),it shall consult in advance with the Minister of Finance and Economy: Provided, That this shall notapply to cases as determined by the Presidential Decree. <Amended by Act No. 5539, May 25,1998>

(3) The Financial Supervisory Commission (referring to the Securities Futures Commission in case ofmatters relating to a violation of the provisions of Articles 188, 188-2, and 188-4) may, where anyforeign securities supervisory agency asks for its cooperation in conducting an investigation orinspection under this Act, giving expressly the objective and scope, etc. of such investigation orinspection, cooperate with such foreign securities supervisory agency. In this case, the FinancialSupervisory Commission may furnish the data on such investigation or inspection to such foreignsecurities supervisory agency or be furnished with such data from such foreign securitiessupervisory agency, according to the principle of reciprocity. <Newly Inserted by Act No. 6176,Jan. 21, 2000; Act No. 6623, Jan. 26, 2002>

(4) The Financial Supervisory Commission may furnish the data on an investigation or inspection toa foreign securities supervisory agency under the latter part of paragraph (3), only in case whereit meets the following requirements: <Newly Inserted by Act No. 6623, Jan. 26, 2002>

1. The data on an investigation or inspection furnished to a foreign securities supervisory agencyshall not be used for other than the purpose of furnishing;

2. Confidentiality shall be kept on the data on an investigation or inspection and the fact offurnishing such data; and

3. The data on an investigation or inspection furnished to a foreign securities supervisory agencyshall not be used for the investigation into or trial of a criminal case in a foreign countrywithout any prior consent from the Financial Supervisory Commission.

(g) Measures pursuant to the results of investigation referred to in Article 206-3 (5);

(h) Disposition to impose penalties referred to in Article 206-11; and

(i) Disposition to impose a fine for negligence referred to in Article 213 (3); and

3. Matters other than those listed in subparagraphs 1 and 2 for which the Financial SupervisoryCommission deems deliberation by the Securities Futures Commission to be necessary.

[This Article Newly Inserted by Act No. 5498, Jan. 8, 1998]

Article 206-6 (Direction and Supervision, etc. over FSS Governor)

Where the Financial Supervisory Commission or the Securities Futures Commission deems it necessaryin order to exercise its powers under this Act, it may direct and supervise the FSS Governor andhave him change his method of executing his duties or give other supervisory orders.

[This Article Newly Inserted by Act No. 5498, Jan. 8, 1998]

Article 206-7 (Duties of Financial Supervisory Service)

The Financial Supervisory Service shall carry out the following duties under the direction andsupervision of the Financial Supervisory Commission or the Securities Futures Commission:<Amended by Act No. 5736, Feb. 1, 1999>

1. Matters on the registration of issuers of securities;

2. Matters on the registration statement of securities;

3. Matters on the tender offer of securities;

4. Matters on inspections of institutions which are subject to inspection by the FSS Governorunder this Act;

5. Matters on the administration of listed corporations or KOSDAQ registered corporations;

6. Matters on the public notification of the analysis and substance of business of registeredcorporations and listed corporations or KOSDAQ registered corporations;

7. Matters on the supervision over sale and purchase transactions of securities outside thesecurities market and KOSDAQ;

8. Business entrusted by the Government;

9. Business assigned under this Act other than those listed in subparagraphs 1 through 8; and

10. Business incidental to those listed in subparagraphs 1 through 9.

[This Article Newly Inserted by Act No. 5498, Jan. 8, 1998]

Article 206-8 (Contributions)

(1) Any person falling under any of the following subparagraphs shall bear part of the workingexpenses of the Financial Supervisory Service:

1. Securities companies which take commission from customers;

2. Issuers who submit a report to the Financial Supervisory Commission pursuant to Article 8;

3. Institutions which are subject to inspection by the FSS Governor under this Act; and

4. Registered corporations.

(2) The amount and limit of the contribution referred to in paragraph (1) and other mattersnecessary for the payment of contributions shall be determined by the Presidential Decree.

[This Article Newly Inserted by Act No. 5498, Jan. 8, 1998]

Article 206-9

Deleted Jan. 29, 2004

Article 206-10 (Hearing)

Where the Minister of Finance and Economy or the Financial Supervisory Commission intends to take adisposition falling under any of the following subparagraphs, it shall hold a hearing: <Amendedby Act No. 6987, Oct. 4, 2003>

1. Cancellation of license or registration of securities companies or transfer agents under theprovisions of Article 55 of this Act or the provisions of Article 152 of the Act on Business ofOperating Indirect Investment and Assets which are applicable mutatis mutandis under Article 180(3); and

(1) The Financial Supervisory Commission may impose penalties of up to 3/100 of the subscription orsales value on a statement of securities (up to two billion won where the price exceeds two billionwon) on a person falling under any subparagraph of Article 14 (1) where he falls under any of thefollowing subparagraphs: <Amended by Act No. 6423, Mar. 28, 2001>

1. Where he makes a false entry or indication or fails to enter or indicate important matters in anyregistration statement, prospectus, or other documents to be submitted under Article 8, 11 or 12;and

2. Where he fails to submit a registration statement, prospectus, or other documents to besubmitted under Article 8, 11 or 12.

(2) The Financial Supervisory Commission may impose penalties of up to 3/100 of the total estimatedamount for tender offer stated in a tender offer statement (up to two billion won where the priceexceeds two billion won) on a person falling under any subparagraph of Article 25-3 (1) where hefalls under any of the following subparagraphs. In this case, a total estimated amount for tenderoffer shall be an amount calculated by multiplying the tender offer price per stock by the numberof stocks: <Amended by Act No. 6423, Mar. 28, 2001>

1. Where he makes a false entry or indication or fails to enter or indicate important matters in anyregistration statement, prospectus, or other documents to be submitted or in the public notice tobe made under Article 21-2, 22, 23-2 or 24; and

2. Where he fails to submit any registration statement, prospectus, or other documents to besubmitted or fails to make public notice of matters to be publicly notified under Article 21-2, 22,23-2 or 24.

(3) The Financial Supervisory Commission may impose penalties within the limit of not exceeding twobillion won on any listed corporation or any KOSDAQ registered corporation where it falls under anyof the following subparagraphs: <Amended by Act No. 6176, Jan. 21, 2000; Act No. 6423, Mar. 28,2001; Jan. 29, 2004>

1. Where it makes a false statement or indication in matters to be reported or disclosed underArticle 186 (1) or (2) or fails to enter or indicate important matters therein; and

2. Where it fails to report or disclose matters to be reported or disclosed under Article 186 (1) or(2).

(4) The Financial Supervisory Commission may impose penalties of up to 10/100 of an average dailytransaction volume (up to two billion won where an amount exceeds two billion won or stocks issuedby a corporation are not traded on the securities market or KOSDAQ) of stocks issued by acorporation quoted in the securities market or KOSDAQ in the immediately preceding year on thecorporation which has to submit an annual business report, a semiannual business report or aquarterly report pursuant to Article 186-2 (1) or 186-3 where it falls under any of the followingsubparagraphs: <Amended by Act No. 6423, Mar. 28, 2001; Jan. 29, 2004>

1. Where it makes a false entry or indication or fails to enter or indicate important matters in areport under Article 186-2 (1) or 186-3; and

2. Where it fails to submit a report under Article 186-2 (1) or 186-3.

(5) The Financial Supervisory Commission may impose penalties of up to 2/100 (1/100 for aconsolidation and two billion won where the amount exceeds two billion won) of the total amount(based on the amount entered in reported documents submitted under Article 190-2) of the book value(for a transfer or takeover of business, the amount acquired or paid in compensation for thetransfer or takeover) of stocks granted in compensation for a merger (including a merger bysplit-off) or split-off and the amount of debts taken over on a stock-listed corporation or KOSDAQregistered corporation where it falls under any of the following subparagraphs: <Amended by ActNo. 6423, Mar. 28, 2001; Jan. 29, 2004>

1. Where it makes a false entry or indication or fails to enter or indicate important matters inmaking a report under Article 190-2; and

2. Where it fails to make a report under Article 190-2.

(6) Where a securities company violates the provisions of Article 54-3 (1) 1, 2, or 4, theFinancial Supervisory Commission may impose penalties of up to 10/100 (up to one billion won wherethe amount exceeds one billion won) of the violated amount of money (in case of Article 54-3 (1) 1,the amount acquired; in case of Article 54-3 (1) 2, the amount loaned or the amount given oncredit; in case of Article 54-3 (1) 4, the amount acquired in excess of the ratio), on thesecurities company. <Newly Inserted by Act No. 6623, Jan. 26, 2002>

(7) Penalties prescribed in paragraphs (1) through (6) shall be imposed on a person subject to theimposition of such penalties who violates the respective corresponding provisions by intention orby gross negligence. <Amended by Act No. 6623, Jan. 26, 2002>

[This Article Newly Inserted by Act No. 5736, Feb. 1, 1999]

Article 206-12 (Imposition of Penalties)

(1) In imposing penalties pursuant to Article 206-11, the Financial Supervisory Commission shalltake account of the following matters according to the standards as determined by the PresidentialDecree:

(3) Where a corporation which has violated the provisions of this Act merges, the FinancialSupervisory Commission may impose and collect penalties on and from the corporation which continuesto exist or is newly established after the merger, deeming the offense committed by the previouscorporation to be an offense committed by the existing or newly established corporation.

(4) Matters necessary for the imposition of penalties shall be determined by the PresidentialDecree.

[This Article Newly Inserted by Act No. 5736, Feb. 1, 1999]

Article 206-13 (Presentation of Opinions)

(1) The Financial Supervisory Commission shall, in advance, give a concerned party or interestedperson an opportunity to present his opinions prior to the imposition of penalties.

(2) A concerned party or interested person described in paragraph (1) may attend a meeting of theFinancial Supervisory Commission and state his opinions or present necessary materials.

[This Article Newly Inserted by Act No. 5736, Feb. 1, 1999]

Article 206-14 (Formal Objection)

(1) A person who is dissatisfied with a disposition of imposition of penalties under Article 206-11may raise an objection to the Financial Supervisory Commission within thirty days from the date ofreceipt of notice of the said disposition by giving the reasons.

(2) The Financial Supervisory Commission shall make a decision on the objection under paragraph (1)within thirty days: Provided, That where it cannot make a decision within such period for anycompelling cause, it may extend the period up to thirty days.

(3) A person who is dissatisfied with a decision under paragraph (2) may apply for administrativeappeal.

[This Article Newly Inserted by Act No. 5736, Feb. 1, 1999]

Article 206-15 (Extension of Time Limit for Payment for and Installment Payment of Penalties)

(1) Where the Financial Supervisory Commission deems that a person who has been subject topenalties (hereinafter referred to as a person liable for the payment of penalties) hasdifficulty in paying penalties in full in a lump sum for a cause falling under any of the followingsubparagraphs, it may extend the time limit for payment or enable him to pay them in installments.In this case, it may, if deemed necessary, have him offer a security:

1. Where he suffers a serious loss of property due to disaster or theft, etc.;

2. Where his business is in a crisis due to worsening business conditions;

3. Where he is expected to face serious financial difficulties due to payment of penalties in a lumpsum; and

4. Where there exist any other causes equivalent to those listed in subparagraphs 1 through 3.

(2) Where a person liable for the payment of penalties intends to have the time limit for paymentextended or pay them in installments, he shall apply for such extension or installments to the

Financial Supervisory Commission not later than ten days prior to the expiration of the time limitfor payment.

(3) Where a person liable for the payment of penalties for whom the time limit for payment thereofis extended or payment thereof in installments is allowed pursuant to paragraph (1) falls under anyof the following subparagraphs, the Financial Supervisory Commission may cancel the extension ofthe time limit for payment or decision on payment in installments and collect penalties in a lumpsum:

1. Where he fails to pay penalties in installments within the time limit for payment;

2. Where he fails to fulfill an order by the Financial Supervisory Commission which is necessary tochange securities or otherwise supplement security;

3. Where it deems that it cannot collect all or the residual of penalties due to compulsoryexecution, opening of auction, declaration of bankruptcy, dissolution of the corporation,disposition on default of national or local taxes; and

4. Where there exist any other causes equivalent to those listed in subparagraphs 1 through 3.

(4) Matters necessary for the extension of the time limit for payment of penalties, payment ininstallments, or security under paragraphs (1) through (3) shall be determined by the PresidentialDecree.

[This Article Newly Inserted by Act No. 5736, Feb. 1, 1999]

Article 206-16 (Collection of Penalties and Disposition on Default)

(1) The Financial Supervisory Commission may collect additional dues as determined by thePresidential Decree for the period from the date following the expiration date of the time limitfor payment to the date preceding the date of payment where a person liable for the payment ofpenalties fails to pay penalties within the time limit for payment.

(2) Where a person liable for the payment of penalties fails to pay penalties within the timelimit, the Financial Supervisory Commission may urge him to pay the penalties, by specifying aperiod,

and where he fails to pay penalties and additional dues under paragraph (1) within thespecified period, the Financial Supervisory Commission may collect them pursuant to the example of thedisposition of national taxes in arrears.

(3) The Financial Supervisory Commission may entrust its duties of the collection or disposition ondefault of penalties and additional dues under paragraphs (1) and (2) to the Commissioner of theNational Tax Administration.

(4) Matters necessary for the collection of penalties shall be determined by the PresidentialDecree.

[This Article Newly Inserted by Act No. 5736, Feb. 1, 1999]

Article 207

Deleted. <by Act No. 5736, Feb. 1, 1999>

CHAPTER XI PENAL PROVISIONS

Article 207-2 (Penal Provisions)

(1) A person who falls under any of the following subparagraphs shall be punished by imprisonmentfor not more than ten years or by a fine not exceeding twenty million won: Provided, That if theamount equivalent to three times of the profit gained or loss evaded by the offense exceeds twentymillion won, he shall be punished by a fine of the amount equivalent to or less than three times ofsuch profit or loss amount evaded:

1. A person who violates the provisions of Article 188-2 (1) or (3); and

2. A person who violates the provisions of Article 188-4.

(2) Where the amount of the profit gained or loss evaded by any such offense as provided in anysubparagraph of paragraph (1) is not less than five hundred million won, aggravated punishmentshall be imposed according to the following subparagraphs: <Newly Inserted by Act No. 6695, Apr.27, 2002>

1. Where the amount of the profit gained or loss evaded is not less than five billion won, thepunishment of imprisonment for life or for not less than five years shall be imposed; and

2. Where the amount of the profit gained or loss evaded is not less than five hundred million wonbut less than five billion won, the punishment of imprisonment for a limited term of not less thanthree years shall be imposed.

(3) Where the punishment of imprisonment is imposed under paragraphs (1) and (2), the suspension ofqualifications for not more than ten years may be imposed concurrently. <Newly Inserted by ActNo. 6695, Apr. 27, 2002>

[This Article Newly Inserted by Act No. 5254, Jan. 13, 1997]

Article 207-3 (Penal Provisions)

Any person falling under any of the following subparagraphs shall be punished by imprisonment fornot more than 5 years or by a fine not exceeding thirty million won: <Amended by Act No. 7025,Dec. 31, 2003; Jan. 17, 2005>

1. A person who makes a public offering of new or outstanding securities or issued new stocks inviolation of Article 8 (excluding paragraph (4) of the same Article) or who violates Article 21-2(1) and (2);

2. A person who intentionally omits or falsely enters or indicates such important matters asprescribed by the Presidential Decree in the registration statement under Article 8, the additionaldocuments of shelf registration statement under Article 10 (2), the amendment statement underArticle 11 (including a case where the provisions are applied mutatis mutandis in Article 186-5 or200-4), the tender offer statement under Article 21-2 (2), the amendment statement under Article23-2 (1), the report documents under Article 186 (1), the business report under Article 186-2, thesemiannual report and the quarterly report under Article 186-3, or the report documents underArticle 190-2 (1) and (2) and a certified public accountant, an appraiser or a credit-ratingspecialist who authenticates them, claiming their correctness with his knowledge of the omissionand false entries andindications;

2-2. A person who affixes his signature provided for in Article 8 (4) (including a case where the

provisions are applied mutatis mutandis under Article 186-5) with his knowledge of the omissionand false entries of the important matters prescribed by the Presidential Decree in theregistration statement provided for in Article 8, the business report provided for in Article 186-2and the semiannual report and the quarterly report provided for in Article 186-3;

3. A person who fails to submit the amendment statement in violation of the latter part of Article11 (3) (including a case where the provisions are applied mutatis mutandis in Article 186-5) or tomake an amendment publication in violation of Article 23-2 (2);

1. A person who conducts the business concerned without a license therefor in accordance with theprovisions of Article 28 (1), 28-2 (1), 145 (1) or 179 (1), or who conducts the business concernedafter cancellation of a license therefor in accordance with the provisions of Article 55 or 155(including where the provisions of Article 155 are applicable mutatis mutandis under Article 179);

2. A person who violates the provisions of Articles 28-2 (3) and 35 (1);

3. A person who violates the provisions of Articles 63, 95 (1), 107 (1) or 173-3;

4. A person who violates the provisions of Article 59 (including where it is applicable mutatismutandis under Article 178), Article 60 (1) (including where it is applicable mutatis mutandisunder Article 178), or Article 61 (including where it is applicable mutatis mutandis under Article178), or who refuses any investigation conducted by the Financial Supervisory Commission referredto in Article 206-3 (2) (meaning the Securities Futures Commission in case of violation of Articles188, 188-2 and 188-4);

2. A person who makes arrangements for a public offering of new or outstanding securities inviolation of the provisions of Article 8;

3. A person who violates the provisions of Article 10;

4. A person who violates the provisions of Article 21(1) or Article 23;

4-2. A person who has acquired stocks without approval in violation of Article 32-3(1) hereof;

4-3. A person who has failed to dispose such stocks in violation of an order in accordance withArticle 32-3(2) hereof

5. A person who carries out the business concerned after being suspended from such business inaccordance with the provisions of Article 57 or 155 (2) (including where the provisions of Article155 (2) are applicable mutatis mutandis under Article 179 (4));

6. A person who violates the provisions of Article 62;

7. A person who violates any order issued upon the basis of the provisions of Article 168;

8. A person who establishes an organization concerned with securities without a license inaccordance with the provisions of Article 181 (1); and

1. A person who violates any disposition of the Financial Supervisory Commission taken upon thebasis of Article 20 (including where it is applicable mutatis mutandis under Article 27-2, 186-5,189-2 (5), 190-2 (3) or 200-4);

2. A person who violates Articles 13 (including where it is applicable mutatis mutandis underArticle 24), 42 (including where it is applicable mutatis mutandis under Article 154, 169, 178, 179or 180) through 44;

3. Deleted; <by Act No. 5254, Jan. 13, 1997>

4. Deleted; <by Act No. 5736, Feb. 1, 1999>

4-2. A person who conducts the business concerned without registration as prescribed in Article 180(1), or who conducts the business concerned after registration is cancelled under the provisions ofArticle 152 of the Act on Business of Operating Indirect Investment and Assets which are applicablemutatis mutandis under Article 180 (3);

5. A person who violates Article 101, 188 (6), or 194-3;

5-2. A person who fails to make a report or makes a material false report or omission in violationof Article 200-2(1) or (4);

6. Deleted; and <by Act No. 6423, Mar. 28, 2001>

7. A person who fails to prepare and keep a depositors account book as prescribed in Article 174 (3)or a customers account book as prescribed in Article 174-2 (1), or who has made a false statementtherein.

1. A person who fails to file a registration in contravention of the provisions of Article 3;

2. A person who violates Article 18-2;

3. A person who refuses, interferes with, or evades the inspection, investigation or confirmationunder Article 19 (1) (including where it is applicable mutatis mutandis under Article 27-2, 186-5,189-2 (5) or 190-2 (3)), 53 (1) (including where it is applicable mutatis mutandis under Articles70-7, 157, 169 or 178 through 181), 174-12 or 200-2 (6);

4. A person who commits a violation of the provisions of Article 37 (including where the provisionsare applicable mutatis mutandis under Article 70-7) or 70-8 (1);

5. A person who disadvantageously treats the reporter, etc. in violation of Article 188-6 (2);

6. A person who neglects the disposal of stocks in contravention of the provisions of Article 189-2(4) or 191 (4); and

7. A person who violates Article 191-19 (2).

(2) A person who falls under any of the following subparagraphs shall be punished by a fine for

1. A person who violates the provisions of Article 17 (including where they are applicable mutatismutandis under Article 27-2), 36, 46 or 107 (2) or (3);

2. A person who fails to comply with a demand for the report, etc. or violates the order pursuant toArticle 19 (1) (including where it is applicable mutatis mutandis under Article 27-2, 186-5, 189-2(5) or 190-2 (3)) or 53 (2) (including where it is applicable mutatis mutandis under Article 157,169 or 178 through 181);

3. A person who violates the provisions of Article 47;

4. A person who violates the provisions of Article 54-5 (1) through (3) or 191-16 (1) and (3);

5. A person who violates the provisions of Article 54-6 (1) and (2) or 191-17;

6. A person who violates the provisions of Article 174-2 (2) or who fails to make a notification, ormakes a false notification, to the beneficial owners in violation of the provisions of Article174-7 (3) through (5);

7. A person who violates the provisions of Article 174-6 (4) or 174-8 (1); and

8. A person who violates the provisions of Article 191 (5), 191-10 (2) and (3), or 191-11 (2).

(3) The fine for negligence as referred to in paragraphs (1) and (2) shall be imposed and collectedby the Financial Supervisory Commission, under the conditions as prescribed by the PresidentialDecree. <Amended by Act No. 5498, Jan. 8, 1998>

(4) A person who is dissatisfied with the disposition of the fine for negligence as referred to inparagraph (3), may raise an objection to the person who is authorized to take the disposition,within thirty days after he is informed of such disposition.

(5) If the person, who is subject to a disposition of fine for negligence pursuant to paragraph(3),

has raised an objection pursuant to paragraph (4) of this Article, the person who isauthorized to take the disposition shall without delay notify the competent court, which shall, upon receivingthe notification, bring the case of fine for negligence to a trial under the Non-Contentious CaseLitigation Procedure Act.

(6) If neither objection is raised, nor fine for negligence is paid, in the period as referred toin paragraph (4) of this Article, it shall be collected according to the examples of thedisposition of national taxes in arrears.

[This Article Wholly Amended by Act No. 4701, Jan. 5, 1994]

Article 214 (Concurrent Punishment)

(1) A person who commits a crime as referred to in Articles 207-2 through 210 may be confined toimprisonment and fined concurrently. <Amended by Act No. 5254, Jan. 13, 1997>

(2) Where a violator of Article 207-2 (2) is subject to a fine in addition to the punishment ofimprisonment in accordance with paragraph (1), he shall be punished by the fine of the amountequivalent to or less than three times of the profit gained or loss evaded in consequence of suchviolation. <Newly Inserted by Act No. 6695, Apr. 27, 2002>

Article 215 (Joint Penal Provisions)

If a representative of a juristic person, or an agent, employee or other employed person of thejuristic person or an individual commits any offense as prescribed in Articles 207-2 through 212 inconnection with the affairs of the juristic person or individual, the fine as prescribed in therespective Articles shall be imposed on such juristic person or individual, in addition to thepunishment of the offender. <Amended by Act No. 5254, Jan. 13, 1997>

[This Article Wholly Amended by Act No. 4701, Jan. 5, 1994]

ADDENDA

Article 1 (Enforcement Date)

This Act shall enter into force on February 1, 1977: Provided, That the provisions of Article 12 ofthe Addenda shall enter into force on the date of its promulgation.

Article 2 (Transitional Measures as to Filing of Registration Statement)

(1) Any registration statement (including amendment statement) and notification which the Ministerof Finance received prior to the effective date of this Act shall be regarded to have been receivedby the Commission, and any designation of effective date thereof shall be regarded as designated bythe Commission.

(2) Notwithstanding the provisions of Article 9 (3) 1, the Commission may, by December 31, 1977,designate an effective date of such registration statement filed by any corporation registered withthe Commission.

Article 3 (Transitional Measures as to Securities Companies)

A securities company, as of the enforcement date of this Act, shall be regarded as a securitiescompany under this Act: Provided, That unless a securities company obtains license by meeting therequirements referred to in Article 28 (3) within three years from the effective date of this Act,the license of such company shall be cancelled.

Article 4 (Transitional Measures as to Accounting)

Accounting of a securities company shall be in accordance with the previous provisions until theCommission adopts the Regulations relating to the Accounting Standards of Securities Companiespursuant to the provision of Article 47.

Article 5 (Transitional Measures as to Order by Minister of Finance)

Orders issued to a securities company by the Minister of Finance prior to the enforcement dateof this Act with respect to extension of credit or other matters shall be regarded as orders by theCommission pursuant to the provisions of Articles 49 and 54.

Article 6 (Transitional Measures as to Registered Salesman)

A registered salesman who entered a registration with the Ministry of Finance as of the enforcementdate of this Act shall be regarded to have been registered with the Commission under this Act:Provided, That when the qualification requirements are determined pursuant to the provisions ofArticle 65 (3), the Commission shall examine every registered salesman and have such one registeragain pursuant to the provisions thereof.

Article 7 (Transitional Measures as to Auditor of Korea Exchange)

An auditor of the Korea Exchange, as of the enforcement date of this Act, shall be regarded as astanding auditor of the Korea Exchange under this Act.

Article 8 (Transitional Measures as to Exchange Members)

Any exchange member who was registered with the Korea Exchange, as of the enforcement date of thisAct, shall be regarded as registered under this Act.

Article 9 (Transitional Measures as to Listed Securities)

(1) Any security which was listed on the Korea Exchange as of the enforcement date of this Actshall be regarded as a security listed under this Act.

(2) Previous provisions shall apply to the listing of securities referred to in Article 88 (1),until the provisions of the Presidential Decree pursuant to the proviso of Article 88 (1) becomeeffective.

Article 10 (Transitional Measures as to Semiannual Reports)

Any listed corporation as of the enforcement date of this Act, for which a period of six months haselapsed since its accounting period commenced, shall file a semiannual report referred to inArticle 92 within forty-five days from the enforcement date of this Act.

Article 11 (Transitional Measures as to Certificates of Contribution of Korea Exchange)

Any certificate of contribution of the Korea Exchange which was owned as of the enforcement date ofthis Act by any person other than the Government or securities companies, may be cancelled throughpurchases by the Korea Exchange from the enforcement date of this Act. In such a case, the methodof purchase, period, purchase price and other necessary matters shall be prescribed by thePresidential Decree.

Article 12 (Establishment of Supervisory Board)

(1) The Minister of Finance shall organize an establishment commission composed of seven or lessmembers appointed by the Minister, and have it handle affairs concerned with the establishment ofthe Supervisory Board.

(2) The establishment commission shall prepare the articles of association of the Supervisory Boardand obtain the authorization of the Minister of Finance with respect thereto.

(3) The establishment commission shall make the registration referred to in Article 130, afterobtaining the authorization pursuant to the provisions of paragraph (2).

(4) When the establishment commission has completed the registration referred to in paragraph (3),it shall turn over its business and property to the director of the Supervisory Board.

(5) When the commission members were appointed pursuant to the provisions of paragraph (1), theGovernment may deliver a contribution referred to in Article 204 to the establishment Commission.

Article 13 (Transitional Measures as to Authority of Commission)

Authority of the Commission and the Supervisory Board pursuant to this Act shall be exercised bythe Minister of Finance until the Commission is organized and the Supervisory Board is established.

Article 14 (Terms of Office of Commissioners First Taking Office)

Notwithstanding the provisions of Article 123, the terms of office of the Commissioners firsttaking office after the effective date of this Act shall be one year for one, two years for one andthree years for one.

Article 15 (Transitional Measures as to Restrictions on Ownership of Stocks)

The time of original listing referred to in Article 200 (1) as to a listed corporation as of theenforcement date of this Act shall be regarded as the record date for closing of a register ofstockholders first taken after the enforcement of this Act.

Any direction which was issued to the Securities Dealers Association by the Minister of Financeprior to the effective date of this Act shall be regarded as measures taken by the Commission underthis Act.

Article 18 (Transitional Measures as to Mutual Ownership of Stocks)

Any stock which a listed corporation owns in violation of the provisions of Article 189 as of theeffective date of this Act shall be transferred within one year from the effective date of thisAct.

Article 19 (Transitional Measures as to Mergers of Unlisted Corporations)

The provisions of Article 190 shall not apply until December 31, 1977, to the case where any listedcorporation merges any registered corporation.

In case any other Act or subordinate statute cites the provisions of the previous Securities andExchange Act, the provisions which fall within the purview thereof in this Act shall, if any, beregarded to be cited for replacement of the previous provisions.

ADDENDA <Act No. 3541, Mar. 29, 1982>

Article 1 (Enforcement Date)

This Act shall enter into force on April 1, 1982.

Article 2 (Transitional Measures as to Filing of Registration Statement)

(1) Registration statements received in accordance with the previous provisions of Article 8 as ofthe enforcement date of this Act shall take effect in accordance with the previous provisions.

(2) Previous provisions shall apply, even after the enforcement of this Act, to the registrationstatement and documents accompanied thereby referred to in Article 8 (2), prospectus referred to inArticle 12 and after-report referred to in Article 17 as far as the forms thereof are concerned,

until the Commission fixes such forms in accordance with this Act.

Article 3 (Transitional Measures as to Eligibility of Officers)

(1) Notwithstanding the provisions of Article 33 (1) and (2) 5 (including the case where it shallapply mutatis mutandis under Article 149, 169 or 178), officers of a securities company, securitiesfinance company, Securities Dealers Association and securities depository corporation as of theenforcement date of this Act, may hold office for a period of their existing terms respectively.

(2) Notwithstanding the provisions of Article 33-2 (including the case where it shall apply mutatismutandis under Article 150 or 178), officers of a securities company, securities finance companyand securities depository corporation as of the enforcement date of this Act, may hold office forthe period of their existing terms.

Article 4 (Transitional Measures as to Securities Savings Business)

Previous provisions shall apply to a securities savings business of a securities company, until theCommission adopts the Securities Savings Business Regulations in accordance with the provisions ofArticle 50 (1).

Article 5 (Transitional Measures as to Investment Counsellors)

(1) A registered salesman registered with the Commission as of the enforcement date of this Actshall be regarded an investment counsellor registered with the Supervisory Board in accordance withthis Act.

(2) A securities company may, notwithstanding the provisions of Article 65 (2), have its officer oremployee perform duties of an investment counsellor in the business office thereof until two yearshave elapsed since the enforcement date of this Act.

(3) Matters reported to the Commission in accordance with the previous provisions of Article 68as of the enforcement date of this Act shall be regarded as reported to the Supervisory Board inaccordance with this Act.

(4) Dispositions taken by the Commission in accordance with the previous provisions of Article 69as of the enforcement date of this Act shall be regarded taken by the Supervisory Board inaccordance with this Act.

Article 6 (Transitional Measures as to Accounting Audit)

Previous provisions shall apply to an audit on such corporation which has entered into an auditcontract with certified public accountants as of the enforcement date of this Act.

Article 7 (Transitional Measures as to Ownership of Block Stocks)

(1) A stockholder, as of the enforcement date of this Act, who comes to exceed the maximum limitreferred to in the latter part of Article 200 (1) as a result of application of the provisions ofthe former part of paragraph (1) of the said Article shall report the contents thereof to theCommission within thirty days from the enforcement date of this Act and the person who reportedthis shall be regarded as the owner as of the time of original listing.

(2) A person who reported the ownership of block stocks to the Commission in accordance with theprevious provisions of Article 201 as of the enforcement date of this Act shall be regarded asreported as major stockholder to the Commission in accordance with the provisions of Article 188(6).

ADDENDA <Act No. 3945, Nov. 28, 1987>

Article 1 (Enforcement Date)

(1) This Act shall enter into force on January 1, 1988, but the revised provisions of Articles 74and 82 shall enter into force on the day on which the Government sells all of its contributioncertificates of the Korea Exchange.

(2) If the Government does not sell all of its contribution certificates of the Korea Exchangeuntil January 1, 1988, the revised provisions of those included in Chapter VI of this Act(excluding the revised provisions of Articles 89, 92, 105 and 107; hereinafter the same shallapply) shall enter into force on the date of its selling.

Article 2 (Application Example concerning Registration Statement)

The revised provisions of Article 8 (1) shall be applicable even in case where a registrationstatement is filed pursuant to the previous provisions at the time this Act enters into force.

Any person who operates an investment advisory business at the time this Act enters into force,shall register the investment advisory business with the Ministry of Finance pursuant to therevised provisions of Article 70-2 (1) within three months after this Act enters into force.

Article 4 (Transitional Measures concerning Korea Exchange)

(1) The Korea Exchange shall satisfy requirements pursuant to this Act within three months afterthe enforcement of this Act (this refers to the enforcement of the revised provisions of thoseincluded in Chapter VI; hereafter the same shall apply in this Article).

(2) Any exchange member registered with the Korea Exchange pursuant to the previous provisions atthe time this Act enters into force shall be considered as a member under this Act.

(3) The capital of the Korea Exchange under the previous provisions at the time this Act entersinto force shall be considered as the contribution of a member under this Act.

(4) The president, executive officers and auditors of the Korea Exchange at the time this Actenters into force shall perform their duties according to the previous provisions until the chiefdirector, managing director, standing directors and auditors are appointed under this Act.

(5) If the president, standing officers and auditors existing at the time this Act enters intoforce are reappointed to the chief director, managing director, standing directors and auditors,respectively, their terms of office shall include the period of service pursuant to the previousprovisions.

The Assistant Governor as prescribed by the articles of association of the Supervisory Board at thetime this Act enters into force shall be considered as the Assistant Governor as prescribed by thisAct, and his term of office shall run on the date he is appointed pursuant to the articles ofassociation of the Supervisory Board.

ADDENDA <Act No. 4469, Dec. 31, 1991>

(1) (Enforcement Date) This Act shall enter into force on the date of its promulgation: Provided,That the revised provisions of Article 200 (1) shall enter into force at the expiration of sixmonths from the enforcement date of this Act, and the revised provisions of Articles 187 and 200-2,at the expiration of three months from the enforcement date of this Act, respectively.

(2) (Transitional Measures concerning Capital of Securities Company) Notwithstanding the revisedprovisions of Article 28 (3), securities companies existing at the time this Act enters into forceshall be considered to satisfy the requirements as prescribed by this Act.

(3) (Transitional Measures concerning Restriction, etc. of Mass Holding of Stocks) Any person whofalls under the revised provisions of Article 200 (1) 1 of this Act at the time this Act entersinto force, shall report the situation of his ownership to the Commission within one month afterthis Act enters into force.

(4) (Transitional Measures concerning Report on Mass Holding of Stocks) Any person who is liable tomake a report pursuant to the revised provisions of Article 200-2 (1) at the time this Act

enters into force, shall report the situation of his ownership to the Commission and the KoreaExchange within one month from the enforcement date of this Act.

ADDENDA <Act No. 4701, Jan. 5, 1994>

Article 1 (Enforcement Date)

This Act shall enter into force on April 1, 1994: Provided, That the revised provisions of Article200 shall enter into force on April 1, 1997; and those of Section 3 of Chapter VIII (Articles 173,173-2 through 173-6, 174, 174-2, 174-4 through 174-8, 175, 176 and 178) and of Article 187, on thedate at which the Securities Depository comes into existence. <Amended by Act No. 5254, Jan. 13,1997>

Article 2 (Examples of Application to Appraisal Rights of Stockholders)

The revised provisions of Article 191 shall be applicable to the portion for which a notificationor public notice on a convocation of the general meeting of stockholders is made on or after thedate this Act enters into force.

(1) Any investment counsellor who has registered with the Securities Supervisory Board at the timethis Act enters into force, shall be considered to have been registered as investment counsellorwith the Securities Dealers Association under this Act.

(2) Matters reported to the Securities Supervisory Board under the previous Article 68 at the timethis Act enters into force, shall be considered to have been reported to the Securities

(1) When the securities depository corporation as prescribed in the previous Article 173(hereinafter referred to as the securities depository corporation) at the time this Act entersinto force, has obtained the approval of the Minister of Finance on the conversion to theSecurities Depository through a resolution of the general meeting of stockholders, it shall beconsidered as the Securities Depository established under the revised provisions of Article 173.

(2) In the case as referred to in paragraph (1), the representative director of the securitiesdepository corporation shall prepare the articles of association of the Securities Depositorywithin three months after this Act enters into force, obtain the authorization of the Minister ofFinance, and take charge of the affairs concerning the registration of incorporation, etc. of theSecurities Depository.

(3) The securities depository corporation shall carry on the affairs pursuant to the previousprovisions until the Securities Depository comes into existence.

(4) When the Securities Depository comes into existence, the stockholders of the securitiesdepository corporation existing at that time shall be those of the Securities Depository, and allrights and duties of the securities depository corporation shall be succeeded en bloc to theSecurities Depository. In this case, the securities depository corporation shall be extinguished onthe day of such succession without going through the procedure of dissolution and liquidation underthe Commercial Act.

(5) The officers of the securities depository corporation existing at the time the SecuritiesDepository comes into existence, shall be considered as those of the Securities Depository asprescribed by this Act, and their terms of office shall count from the day on which they have beenappointed as officers of the securities depository corporation.

Article 6 (Transitional Measures concerning Approval on Use of Printed Forms of Securities)

Approval on the use of the printed forms of securities made by the Securities Supervisory Boardfor a non-listed corporation before the revised provisions of Article 187 enter into force, shallbe considered as approval made by the Securities Depository.

Any person who is to make a report pursuant to the revised provisions of Article 200-2 (1) at thetime this Act enters into force, shall make a report on the situation of his holdings to theCommission and the Korea Exchange within one month after this Act enters into force.

Article 8 (Transitional Measures concerning Conciliation Commission)

(1) The dispute conciliation institution established by the previous provisions at the time thisAct enters into force, shall be considered as the securities dispute conciliation commission underthis Act.

(2) Any request for a conciliation of dispute made pursuant to the previous provisions before thisAct enters into force, shall be considered as a request for dispute conciliation under this Act.

Article 9 (Relation with Other Acts and Subordinate Statutes)

Any citation of the securities depository corporation in other Acts and subordinate statutes at thetime the Securities Depository comes into existence, shall be considered as a citation of theSecurities Depositor.

ADDENDA <Act No. 5254, Jan. 13, 1997>

Article 1 (Enforcement Date)

This Act shall enter into force on April 1, 1997: Provided, That the revised provisions ofsubparagraph 6 of Article 3 and Article 189-4 shall enter into force on the date of itspromulgation; and the revised provisions of Section 2 of Chapter VIII (excluding the provisions ofArticle 167), on the date on which the Korea Dealers Association comes into existence,respectively. <Amended by Act No. 5498, Jan. 8, 1998>

The revised provisions of Article 33 (2) 3 and 5 (including the case where it shall apply mutatismutandis under Articles 70-7, 149 (2), 169, 178, 179 (4) and 180 (3)), subparagraphs 4 and 5 ofArticle 80, subparagraphs 4 and 5 of Article 121 and Article 133 (8) shall not apply with respectto an officer who is in office at the time of enforcement of this Act.

Article 5 (Applicable Cases concerning Term of Office of Auditor of Korea Exchange)

The revised provisions of Article 78 (7) shall apply to an auditor who is assigned on or after thedate this Act comes into force.

The revised provisions of Articles 186-2 and 186-3 shall apply from the business year commencingnewly after this Act comes into force: Provided, That in the case of a corporation of which thelast day of business year falls under the period between December and February, they shall applyfrom the business year to which the date of enforcement of this Act belongs.

The revised provisions of Article 191-11 (1) and (2) shall apply from the general meeting ofstockholders which is convened for the first time after this Act comes into force; and the revisedprovisions of paragraph (3) of the said Article, from an auditing report which an auditor submitsto directors for the first time after this Act comes into force.

An employee stock ownership association pursuant to subparagraph 5 of Article 2 of the CapitalMarket Promotion Act (Act No. 4679) at the time of enforcement of this Act, shall be considered asan employee stock ownership association pursuant to the revised provisions of Article 2 (18) ofthis Act.

In case where the license for securities business referred to in the previous provisions of Article2 (8) 4 is obtained pursuant to the provisions of Article 28 (2) 2 at the time of enforcement ofthis Act, it shall be considered as a license for securities business pursuant to the revisedprovisions of Article 2 (8) 4.

Article 13 (Transitional Measures concerning Protection Fund)

Securities company bound to set aside protection fund pursuant to the revised provisions of Article69-2 (3), shall set aside the protection fund pursuant to the revised provisions of paragraph (2)of the said Article within one month after this Act comes into force.

Article 14 (Transitional Measures concerning Report on Business Similar to Investment AdvisoryBusiness)

A person who conducts a business similar to investment advisory business pursuant to Article 70-8at the time of enforcement of this Act, shall report pursuant to the revised provisions of Article70-8 within one month after the enforcement date of this Act.

Article 15 (Transitional Measures concerning Fees)

Fees which has been collected by the Supervisory Board during the period from January 1, 1997 tothe last day before the enforcement date of this Act according to the previous provisions ofArticle 143, shall be considered as the fees pursuant to the revised provisions of Article 143.

(1) The Korea Securities Dealers Association, the incorporated association, which was establishedpursuant to the previous provisions of Article 162 and is existing at the time of enforcement ofthis Act (hereinafter referred to as the Association), shall be considered as the KoreaSecurities Dealers Association which is established pursuant to the revised provisions of Article162.

(2) In case of paragraph (1) of this Article, the president of the Association shall prepare thearticles of association of the Korea Securities Dealers Association within three months from theenforcement date of this Act and shall obtain the authorization of the Minister of Finance andEconomy; and he shall manage the affairs relating to the registration of incorporation of the KoreaSecurities Dealers Association.

(3) The Association shall conduct the business pursuant to the previous provisions until the KoreaSecurities Dealers Association comes into existence.

(4) When the Korea Securities Dealers Association comes into existence, the members of theAssociation at the time when it comes into existence shall become the members of the KoreaSecurities Dealer Association, and the Korea Securities Dealers Association shall succeed to therights and obligations of the Association by a universal title. In this case, the Association shallcease to exist at the date of succession by a universal title without being subject to theprocedure of dissolution and liquidation pursuant to the provisions of the Civil Act.

(5) Officers of the Association at the time when it comes into existence shall be considered asofficers of the Korea Securities Dealers Association pursuant to this Act, and the terms of officeof such officers shall begin on the date on which officers of the Association has been appointed.

A corporation listed on KOSDAQ pursuant to the previous provisions of Article 194 at the time thisAct enters into force shall be regarded as a corporation registered with the Korea SecuritiesDealers Association pursuant to the revised provisions of Article 172-2.

The Korea Listed Companies Association, the incorporated association, which is established pursuantto the Civil Act at the time this Act enters into force, shall be deemed to be established with thelicense by the Minister of Finance and Economy under the revised provisions of Article 181 (1).

Article 20 (Transitional Measures concerning Nonvoting Stocks)

In case where the number of nonvoting stocks issued pursuant to Article 7 of the previous CapitalMarket Promotion Act (Act No. 3946) (including the number of nonvoting stocks issued after theenforcement of the Capital Market Promotion Act (Act No. 4679) due to the exercise of the rights ofconvertible bonds or bonds with warrants which have been issued before the enforcement of theCapital Market Promotion Act (Act No. 4679)), exceeds 1/4 of the total number of the issued stocks,the portion exceeding such ratio shall be considered that it is issued under the revised provisionsof each subparagraph of Article 191-2 (1).

New type bonds issued pursuant to Article 9 of the Capital Market Promotion Act at the time thisAct enters into force, shall be considered that they are issued pursuant to the revised provisionsof Article 191-4.

Article 22 (Transitional Measures concerning Public Notice on Convocation of General Meeting)

The public notice on the convocation of the general meeting of stockholders effected pursuant toArticle 23 of the Capital Market Promotion Act at the time this Act enters into force, shall beconsidered that it is effected pursuant to the revised provisions of Article 191-10 (1).

Article 23 (Transitional Measures concerning Standing Auditor)

A stock listed corporation which shall appoint a standing auditor pursuant to the revisedprovisions of Article 191-12 (1), shall appoint a standing auditor by the time of the regulargeneral meeting of stockholders convened for the first time after this Act enters into force.

A person who shall make the report pursuant to the revised provisions of Article 200-2 (1) at thetime this Act enters into force, shall report the situation of holdings to the Commission and theKorea Exchange within two months from the enforcement date of this Act.

Article 25 (Repeal of Other Act, etc.)

(1) The Capital Market Promotion Act shall be repealed.

(2) In case where the provisions of the previous Capital Market Promotion Act was quoted in otherActs and subordinate statutes at the time this Act enters into force, this Act and the provisionsin this Act corresponding to the provisions of the previous Capital Market Promotion Act shall beconsidered to have been quoted in place of the provisions of the previous Capital Market PromotionAct.

ADDENDA <Act No. 5423, Dec. 13, 1997>

(1) (Enforcement Date) This Act shall enter into force on April 1, 1998: Provided, That the

(2) (Applicable Cases concerning Interim Dividends) The amended provisions of Article 192-3 shallapply from the business year commencing for the first time after January 1, 1998.

(3) (Transitional Measures on Penal Provisions) The application of penal provisions to actscommitted prior to the entry into force of this Act shall be governed by the previous provisions.

ADDENDA <Act No. 5498, Jan. 8, 1998>

Article 1 (Enforcement Date)

This Act shall enter into force on April 1, 1998: Provided, That the provisions among the amendedprovisions of Articles 69-6 and 200-2 which pertain to KOSDAQ registered corporations, the amendedprovisions of Article 1 of the Addenda of Act No. 5254, and the amended provisions of paragraph (1)of the Addenda of Act No. 5423 shall enter into force on the date of its promulgation, the amendedprovisions of Article 206-10 shall enter into force on January 1, 1998, and the amended provisionsof Article 69-6 shall remain in force until March 31, 1998.

(1) Any approval, authorization, order, disposition, measures, consent, proposition,recommendation, direction, request, adjustment, etc. and inspection or investigation conducted bythe Securities and Exchange Commission or the Securities Supervisory Board pursuant to the previousprovisions prior to the entry into force of this Act shall be deemed to have been conducted by theFinancial Supervisory Commission, the Securities Futures Commission or the FSB Director under thisAct.

(2) Any declaration and report, etc. received or accepted by the Securities and Exchange

Commission or the Financial Supervisory Board prior to the entry into force of this Act shall bedeemed to have been received or accepted by the Financial Supervisory Commission, the SecuritiesFutures Commission or the FSB Director under this Act.

(3) Any corporation registered with the Securities and Exchange Commission at the time when thisAct enters into force shall be deemed to have been registered with the Financial SupervisoryCommission under this Act.

Article 3 (Transitional Measures on License for Securities Business in Foreign Countries)

Any securities company which has obtained a license on operating a securities business in a foreigncountry from the Minister of Finance and Economy at the time when this Act enters into force shallbe deemed to have made a report to the Financial Supervisory Commission pursuant to the amendedprovisions of Article 28 (7).

Article 4 (Transitional Measures on Protection Fund)

The fund management company referred to in the previous provisions of Article 69-2 (1) shall returnthe reserve accumulated by a securities company bound to set aside the fund referred to inparagraph (3) of the same Article (including the right of indemnification referred to in Article69-3 (4) where the real balance of the protection fund falls short of the reserve due to thepayment, etc. referred to in Article 69-3 (1)) to the securities company bound to set aside thefund not later than one month from the date of entry into force of this Act.

Article 5 (Transitional Measures on License for Investment Advisory Business and DiscretionaryInvestment Business in Foreign Countries)

Any investment advisory company which has obtained a license on operating investment advisorybusiness or discretionary investment business in a foreign country from the Minister of Finance andEconomy at the time when this Act enters into force shall be deemed to have made a report to theFinancial Supervisory Commission pursuant to the amended provisions of Article 70-2 (3).

Article 6 (Transitional Measures on Authorization, etc. of Business of Korea Exchange, etc.)

Any business which has obtained authorization or approval from the Minister of Finance and Economypursuant to the previous provisions of Article 73 (1) 8, subparagraph 7 of Article 162-2 andArticle 173-2 (2) at the time when this Act enters into force shall be deemed to be a businessauthorized or approved by the Financial Supervisory Commission under this Act.

Article 7 (Transitional Measures on Approval of Change of Articles of Association of SecuritiesFinance Company, etc.)

Any securities finance company, the Korea Securities Dealers Association, any order matchingcompany, any transfer agency and other organizations relating to securities which have obtainedapproval from the Minister of Finance and Economy on the change of articles of association at thetime this Act enters into force shall be deemed to have obtained approval from the FinancialSupervisory Commission pursuant to the amended provisions of Article 151 (1) (including casesapplied mutatis mutandis under Articles 169, 179, 180 and 181).

Any exchange of information with a foreign securities supervisory agency by the Stock and ExchangeCommission under the previous provisions of Article 129-2 shall be deemed to have been effected bythe Financial Supervisory Commission under this Act.

Any person who has to make a report referred to in the amended provisions of Article 200-2 at thetime when this Act enters into force shall make a report to the Stock and Exchange Commission andthe Korea Securities Dealers Association not later than one month from the date of entry into forceof this Act.

Article 10 (Transitional Measures on Contributions)

Contribution paid to the Securities Supervisory Board at the time when this Act enters into forceshall be deemed to be contributions paid to the Financial Supervisory Board pursuant to the amendedprovisions of Article 206-8.

Article 11 (Continuance in Existence of Securities Supervisory Board and Succession to ItsProperty, Rights and Duties)

(1) Notwithstanding the amended provisions of this Act, the Securities Supervisory Board shallcontinue in existence until the date on which the Financial Supervisory Board is establishedpursuant to the Act on the Establishment, etc. of Financial Supervisory Organizations.

(2) All the rights and duties which belong to the Securities Supervisory Board shall be succeededto by universal title by the Financial Supervisory Board on the date on which the FinancialSupervisory Board is established, and the titles of the Securities Supervisory Board indicated inits register or other public books on property and rights and duties shall be deemed to be thetitles of the Financial Supervisory Board.

(3) The value of property to which the Financial Supervisory Board succeeds pursuant to paragraph(2) shall be the book value at the time of its succession.

(1) The Securities Supervisory Board shall be deemed the Financial Supervisory Board in theapplication of the provisions of Articles 18, 23, 39 and Chapters IV and V of the Act on theEstablishment, etc. of Financial Supervisory Organizations until the date on which the FinancialSupervisory Board is established.

(2) The Director of the Securities Supervisory Board shall be appointed by the President on therecommendation of the Financial Supervisory Commission until the Financial Supervisory Board

is established, and the person who has been appointed as Chairman of the Stock andExchange Commission prior to the entry into force of this Act shall be deemed to have beenappointed as the Director of the Securities Supervisory Board.

(3) The provisions of Article 29 (3) of the Act on the Establishment, etc. of Financial SupervisoryOrganizations shall apply mutatis mutandis to the appointment of the Vice-Director and assistantvice-director of the Securities Supervisory Board until the date on which the Financial SupervisoryBoard is established: Provided, That any person who has been appointed under the previous Act atthe time when this Act enters into force shall be deemed to have been appointed under the Act onthe Establishment, etc. of Financial Supervisory Organizations until the date on which theFinancial Supervisory Board is established.

(4) Where the Director of the Securities Supervisory Board is unable to perform his duties due toan accident from the date on which the Securities and Exchange Commission is abolished to the dateon which the Financial Supervisory Board is established, the Vice-Director shall act as chairman onhis behalf.

[This Article Newly Inserted by Act No. 5521, Feb. 24, 1998]

Article 12 (Transitional Measures on Penal Provisions)

The application of penal provisions to acts committed prior to the entry into force of this Actshall be governed by the previous provisions.

Article 13 (Transitional Measures on Fine for Negligence)

(1) The application of the provisions of a fine for negligence to acts committed prior to the entryinto force of this Act shall be governed by the previous provisions.

(2) A fine for negligence imposed by the Minister of Finance and Economy at the time when this Actenters into force shall be deemed to have been imposed by the Financial Supervisory Commissionpursuant to the amended provisions of Article 213 (3).

Article 14

Omitted.

Article 15 (Relation to Other Acts and Subordinate Statutes)

Where other Acts and subordinate statutes cite the previous provisions at the time when this Actenters into force, if this Act includes the provisions corresponding to them, the provisionscorresponding to this Act shall be deemed to have been cited in lieu of the previous provisions.

ADDENDA <Act No. 5521, Feb. 24, 1998>

(1) (Enforcement Date) This Act shall enter into force on April 1, 1998: Provided, That the amendedprovisions of Articles 21, 21-3, 25-2 (2), 188-2 (1), and 189-2 (1) and subparagraph 4 of Article209 shall enter into force on the date of its promulgation.

(2) (Applicable Cases concerning Tender Offer of Securities) The amended provisions of Articles 21(2), 21-3, and 25-2 (2) and subparagraph 4 of Article 209 shall not apply to cases where tenderoffer statements have been submitted pursuant to the previous provisions prior to the entry intoforce of this Act.

ADDENDUM <Act No. 5539, May 25, 1998>

This Act shall enter into force on the date of its promulgation.

ADDENDA <Act No. 5559, Sep. 16, 1998>

Article 1 (Enforcement Date)

This Act shall enter into force two months after the date of its promulgation.

Articles 2 through 9

Omitted.

ADDENDA <Act No. 5591, Dec. 28, 1998>

Article 1 (Enforcement Date)

This Act shall enter into force on the date of its promulgation. (Proviso Omitted.)

With respect to officers, employees or major stockholders of a KOSDAQ registered corporation at thetime when this Act enters into force, the amended provisions of Article 188 (1) and (2) shall applyto the portion of purchase or sale effected on or after the date this Act enters into force. Inthis case, in applying the amended provisions of Article 188 (2), the calculation of a six-monthperiod shall be reckoned from the point of purchase or sale effected initially after this Actenters into force.

The amended provisions of Article 191-11 (1) and (2) shall apply starting from a general meeting ofstockholders to which a bill for appointing, dismissing or determining remuneration for an auditoris first proposed after this Act enters into force, and the amended provision of paragraph (3) ofthe said Article shall apply starting from the audit report first submitted by the auditor todirectors after the entry into force of this Act.

Article 5 (Applicable Cases concerning Penalties)

The amended provisions of Article 206-11 shall apply starting from the portion submitted, stated,announced, disclosed or reported after the entry into force of this Act.

Where an officer of a securities company who has been in office at the time when this Act entersinto force falls under the amended provisions of Article 33 (2) 4 due to a cause which occurredbefore this Act enters into force, he shall, notwithstanding the said amended provisions, begoverned by the previous provisions until his term of office expires.

Article 7 (Transitional Measures on Custody and Management of Customer Deposit Money by

Securities Companies)

A securities company (including foreign securities companys domestic branches) engaged only inbusiness listed in Article 28 (2) 2 at the time of the entry into force of this Act which hasreceived, had custody of, and managed customer deposit money, shall, notwithstanding the amendedprovisions of Article 44-2, be governed by the amended provisions of Article 44-3 for two yearsfrom the date of the entry into force of this Act.

A trade name of a securities company engaged only in business listed in Article 28 (2) 2 at thetime of the entry into force of this Act shall, notwithstanding the amended provisions of thelatter part of Article 62 (1), be governed by the previous provisions.

A person who has registered investment advisory business with, obtained a license for discretionaryinvestment business from, and reported any similar investment advisory business to the Minister ofFinance and Economy pursuant to the previous provisions at the time of the entry into force of thisAct shall be deemed to have registered with, or reported to the Financial Supervisory Commissionunder the amended provisions of Articles 70-2, 70-8 and 70-9.

Article 10 (Transitional Measures on Registration of Transfer Agents)

A transfer agent who has obtained a license from the Minister of Finance and Economy pursuant tothe previous provisions at the time of the entry into force of this Act shall be deemed to haveregistered with the Minister of Finance and Economy under the amended provisions of Article 180(1).

In applying the amended provisions of Article 186-2 (5), conglomerate combined financial statementsof a business year commencing after January 1, 1999 shall be submitted within seven months afterthe end of the business year.

Article 12 (Transitional Measures on Report of Status of Stockholdings)

The officers or major stockholders of a KOSDAQ registered corporation which has to report thestatus of stockholdings pursuant to the amended provisions of Article 188 (6) at the time when thisAct enters into force shall, notwithstanding the amended provisions of the said Article andparagraph, report the status of stockholdings to the Securities Futures Commission and theAssociation within one month from the date when this Act enters into force.

A KOSDAQ registered corporation which holds treasury stocks in excess of the acquisition limitunder the latter part of Article 189-2 (1) at the time when this Act enters into force shalldispose of the excess by the time the money trust contract under paragraph (2) of the same Articleterminates.

A KOSDAQ registered corporation which has to appoint full-time auditors pursuant to the amendedprovisions of Article 191-12 (1) shall appoint them by the first stockholders meeting after thisAct enters into force.

Where any officer of a securities company, an investment advisory company, a securities financecompany or the Association falls under the disqualification due to the cause under the amendedprovisions of Article 33 (2) (including the case in which the provisions apply mutatis

mutandis under the provisions of Articles 70-7, 149 (2) and 169) that has occurred prior to theenforcement of this Act at the time of the entry into force of this Act, his case shall be dealtwith according to the previous provisions notwithstanding the amended provisions.

The amended provisions of Article 54-2 shall not apply to any securities company falling under anyof the following subparagraphs until the day prescribed by the Presidential Decree:

1. A securities company that has been incorporated as a result of the conversion of a financialinstitution or a securities company that has merged with a financial institution in accordance withthe Act on the Structural Improvement of the Financial Industry; and

2. A securities company that, after having been ordered to take timely and corrective measures underthe Act on the Structural Improvement of the Financial Industry, is presently implementing a planfor such measures.

Any securities company that has to appoint outside directors in accordance with the amendedprovisions of Article 54-5 shall appoint such outside directors in accordance with such amendedprovisions at a regular general meeting of stockholders that is called for the first time after theenforcement of this Act. In this case, any outside director appointed at the regular generalmeeting of stockholders shall be deemed to be recommended by the outside director candidaterecommendation committee in accordance with the provisions of Article 54-5 (2) and (3).

Any securities company that has to establish an inspection committee in accordance with the amendedprovisions of Article 54-6 shall establish such inspection committee at a regular general meetingof stockholders that is called for the first time after the enforcement of this Act.

Any corporation that grants its officers and employees the stock option under the previousprovisions at the time of the entry into force of this Act shall be deemed to grant them such stockoption in accordance with the amended provisions of Article 189-4.

(1) Any stock-listed corporation that has to appoint outside directors in accordance with theamended provisions of Article 191-16 shall appoint such outside directors in accordance with suchamended provisions at a regular general meeting of stockholders that is called for the first timeafter the enforcement of this Act. In this case, any person appointed as an outside director at theregular general meeting of stockholders shall be deemed to be recommended by the outside directorcandidate recommendation committee in accordance with the provisions of Article 54-5 (2) and (3)that are applied mutatis mutandis by the amended provisions of Article 191-16 (3).

(2) Any stock-listed corporation under the provisions of the proviso of Article 191-16 (1) shall,notwithstanding the amended provisions of the same Article, increase the number of outsidedirectors to 3 or more prior to a regular general meeting of stockholders that is called for thefirst time after the end of the 2000 business year, but may make the number of outside directorsless than half of the total number of directors on the board of directors.

(3) Any outside director who holds office at a stock-listed corporation at the time that this Actis enforced shall be deemed to be an outside director appointed under this Act until his term of

Any stock-listed corporation that has to establish an inspection committee in accordance with theamended provisions of Article 191-17 shall establish such inspection committee in accordance withthe amended provisions at a regular general meeting of stockholders that is called for the firsttime after the enforcement of this Act.

With respect to any standing auditor (in case that there are not less than two standing auditors,one standing auditor designated by the board of directors of a stock-listed corporation out of suchnot less than two standing auditors) who holds office at a stock-listed corporation that has toestablish an inspection committee in accordance with the amended provisions of Article 191-17 atthe time of the entry into force of this Act, where his term of office does not expire by the dateon which a regular general meeting of stockholders is called to establish an inspection committeein accordance with the provisions of Article 9 of the Addenda and he is not dismissed at suchregular general meeting of stockholders, he shall be deemed not an outside director but a member ofthe inspection committee until his term of office expires. In this case, such standing auditorshall be deemed a director appointed at a general meeting of stockholders in accordance with theprovisions of Article 382 (1) of the Commercial Act until his term of office expires.

The amended provisions of Article 54-4 (4) shall apply starting with the portion of the complianceofficer selected and appointed first after the enforcement of this Act.

Article 4 (Applicable Cases for Selection of Chairman of Inspection Committee of Major Stock-ListedCorporation)

In the event that the chairman of the inspection committee of any stock-listed corporation or anyKOSDAQ registered corporation that is required to set up an inspection committee at the time thatthis Act enters into force is not an outside director, such stock-listed corporation or such KOSDAQregistered corporation shall select and appoint a chairman who is an outside director in compliancewith the amended provisions of Article 54-6 (2) (including a case where the provisions are appliedmutatis mutandis in Article 191-17 (2)) not later than three months after this Act takes effect.

Article 5 (Applicable Cases for Recommendation of Candidates for Public Interest Director of KoreaExchange)

The amended provisions of Article 78 (4) shall apply starting with the portion of a directorrepresenting the public interest selected and appointed first after the enforcement of this Act.

Article 6 (Applicable Cases for Granting of Stock Option)

The amended provisions of Article 189-4 (3) and (4) shall apply starting with the portion of thestock option granted first after the enforcement of this Act.

Any person who is licensed with his securities business under the previous provisions of Article 2(8) 3 at the time that this Act enters into force shall be deemed licensed with his securitiesbusiness under the amended provisions of Article 2 (8) 3.

(1) In the event that a tender offer statement is filed under the previous provisions of Article21-2 prior to the enforcement of this Act, notwithstanding the amended provisions of Articles 21,21-2, 21-3, 22, 23 and 23-2, such tender offer statement shall be governed by the previousprovisions.

(2) With respect to a registration statement, etc. filed with the Financial Supervisory Commission,etc. under the previous provisions of Article 26 prior to the enforcement of this Act,notwithstanding the amended provisions of Article 26, such registration statement, etc. shall begoverned by the previous provisions.

With respect to prohibiting any standing officer of a securities company, who is engaged in theregular business of a corporation that is not a company from holding any concurrent office underthe previous provisions at the time that this Act enters into force, notwithstanding the amendedprovisions of Article 48, he shall be governed by the previous provisions until his term of officeexpires.

With respect to any securities company that uses a trade name under the previous provisions at thetime that this Act enters into force, notwithstanding the amended provisions of Article 62 (1), theuse of such trade name by such securities company shall be governed by the previous provisions.

(1) Any person who works for the Korea Exchange as a managing director at the time that this Actenters into force shall be deemed appointed as vice chief director of the Korea Exchange under theamended provisions of Article 78 (1) 2 and (3) until his term of office expires.

(2) Any person who works for the Korea Exchange as a standing director at the time that this Actenters into force shall be deemed an executive officer under the amended provisions of Article 74(1) 5 until his term of office expires.

(1) The Committee on the Operation of KOSDAQ, which is established in accordance with theregulations on the operation of the previous KOSDAQ at the time that this Act enters into force,shall be deemed the KOSDAQ Operation Committee established pursuant to the amended provisions ofArticle 172-2 (2).

(2) Members of the committee that is deemed the KOSDAQ Operation Committee under paragraph (1)shall be deemed members of the KOSDAQ Operation Committee established under the amended provisionsof Article 172-2 (2) until their terms of office expire.

The regulations made on the operation of KOSDAQ at the time that this Act enters into force shallbe deemed to be in conformity with the amended provisions of Article 172-3 within the limit of 6months from the date on which this Act enters into force, until new regulations are made under theamended provisions of Article 172-3.

Article 16 (Transitional Measures concerning Retirement of Stocks)

Any treasury stocks held by any stock-listed corporation or any KOSDAQ registered corporation afterhaving acquired them under Article 189-2 at the time that this Act enters into force may be retiredunder the amended provisions of Article 189 (1). In this case, the requirements falling under eachof the following subparagraphs shall be satisfied and Article 189 (4) and (5) shall be appliedthereto:

1. It is required to file a report thereon with the Financial Supervisory Commission, the KoreaExchange or the Association under Article 189-2 (3). In this case, in the application of the sameparagraph of the same Article, the Financial Supervisory Commission may set separate standards;

2. It is required to go through a resolution of the board of directors with respect to kinds andtotal numbers of stocks to be retired, the total value of stocks to be retired and the date onwhich it is intended to retire such stocks;

3. The total value of the stocks to be retired is required to be within the limit provided for inArticle

189 (3) 2; and

4. The stocks to be retired are required to be in the lapse of 6 months from the date on which theyare acquired.

(1) Any KOSDAQ registered corporation that is required to select and appoint outside directorsunder the amended provisions of the main sentence of Article 191-16 (1) shall select and appointsuch outside directors under the amended provisions at a regular general meeting of stockholderscalled for the first time after the enforcement of this Act. In this case, notwithstanding theamended provisions of the main sentence of the same paragraph of the same Article, the relevantKOSDAQ registered corporation shall increase the number of outside directors to not less than oneprior to a regular general meeting of stockholders called for the first time after the end of the2001 business year, but the number of the outside directors may be less than a quarter of the totalnumber of directors on the board of directors.

(2) Any KOSDAQ registered corporation that is required to select and appoint outside directorsunder the amended provisions of the proviso of Article 191-16 (1) shall select and appoint suchoutside directors under the same amended provisions at a regular general meeting of stockholderscalled for the first time after the enforcement of this Act. In this case, notwithstanding theamended provisions, the relevant KOSDAQ registered corporation shall make the number of outsidedirectors not less than three prior to a regular general meeting of stockholders called for thefirst time after the end of the 2001 business year, but may make the number of the outsidedirectors less than a half of the total number of directors on the board of directors. Any personwho is selected and appointed as an outside director at a regular general meeting of stockholderscalled for the first time after the enforcement of this Act shall be deemed recommended by theoutside director candidate recommendation committee.

Any KOSDAQ registered corporation that is required to set up an inspection committee underthe amended provisions of Article 191-17 shall establish such inspection committee under the sameamended provisions by the date on which a regular general meeting of stockholders is called for thefirst time after the enforcement of this Act.

In the event the term of office of any standing auditor (referring to a standing auditor designatedby the board of directors of the relevant company in the event of not less than two standingauditors) who serves in a KOSDAQ registered corporation that is required to set up an inspectioncommittee under the amended provisions of Article 191-17 at the time of entry into force of thisAct does not expire by the date on which a regular general meeting of stockholders is called todiscuss the question of establishing an inspection committee under the provisions of Article 16 ofthe Addenda and he is not dismissed at such regular general meeting of stockholders, such standingauditor shall be deemed a member, who is not an outside director, of the inspection committee ofthe relevant corporation until his term of office expires. In this case, the standing auditor shallbe deemed a director selected and appointed at a general meeting of stockholders under Article 382(1) of the Commercial Act until the time that his term of office expires.

Article 20 (Transitional Measure concerning Penal Provisions)

The application of the penal provisions to any act committed prior to the enforcement of this Actshall be governed by the previous provisions.

ADDENDA <Act No. 6623, Jan. 26, 2002>

(1) (Enforcement Date) This Act shall enter into force on February 1, 2002.

(2) (Applicable Cases concerning Appraisal Rights of Stockholders) The amended provisions ofArticle 191 shall apply with respect to the public notice or notification which is made for theconvocation of the general meeting of stockholders or which is made under Article 360-9 (2) or

527-2 (2) of the Commercial Act on or after the date this Act takes effect.

(3) (Transitional Measures concerning Reserve for Securities Transaction) The reserve forsecurities transaction set aside by a securities company in accordance with the previous provisionsof Article 40 at the time of the entry into force of this Act shall be distributed proportionallyover a fixed period as set and publicly announced by the Financial Supervisory Commission.

(4) (Transitional Measures concerning Fine for Negligence) The application of a fine for negligenceto any act committed prior to the enforcement of this Act shall be governed by the previousprovisions.

ADDENDA <Act No. 6695, Apr. 27, 2002>

(1) (Enforcement Date) This Act shall enter into force on the date of its promulgation.

(2) (Transitional Measures concerning Application of Penal Provisions) The imposition of a penaltyon any act committed prior to the enforcement of this Act shall be governed by the previousprovisions.

ADDENDA <Act No. 6987, Oct. 4, 2003>

Article 1 (Enforcement Date)

This Act shall enter into force three months after the date of its promulgation.

Articles 2 through 20

Omitted.

ADDENDA <Act No. 7025, Dec. 31, 2003>

Article 1 (Enforcement Date)

This Act shall enter into force on April 1, 2004: Provided, That the amended provisions of Article191-16 (1) shall enter into force on July 1, 2004.

The amended provisions of Article 8 (4) (including a case where the amended provisions are appliedmutatis mutandis under Article 186-5) and Article 14 (1) (including a case where the amendedprovisions are applied mutatis mutandis under Articles 25-3 (1), 186 (4), 186-5, 189-2 (5) and190-2 (3)) shall apply, starting with any report on securities, any prospectus (including anypreliminary prospectus and any simplified prospectus), any business report, any semiannual reportand any quarterly report, etc, that are submitted first after the enforcement of this Act.

The amended provisions of Article 54-6 (2) 2 (including a case where the amended provisions areapplied mutatis mutandis under Article 191-17 (2)) shall apply, starting with a case where any newmember of the inspection committee is newly elected and appointed on the grounds that any memberfaces the expiration of his term of office, resigns or is dismissed.

Article 4 (Application Example concerning Matters to be Entered in Business Report and QuarterlyDividends)

The amended provisions of Articles 186-2 (2) and 192-3 shall apply, starting with the business yearthat commences first after the enforcement of this Act.

Any stock-listed corporation and any KOSDAQ registered corporation that are required to selectand appoint outside directors in accordance with the amended provisions of Article 191-16 (1) shallselect and appoint such outside directors in conformity with the amended provisions by the date onwhich the regular general meeting of stockholders is convened first after July 1, 2004.

The amended provisions of Article 191-19 (1) shall not apply to the portion of transactionsexecuted prior to the enforcement of this Act: Provided, That the same shall not apply to a casewhere the deadline of such transactions is extended or the terms of such transactions are changedafter the enforcement of this Act.

(1) The settlement safety fund accumulated or other funds or deposits accumulated for the similarpurposes in accordance with the existing operating rules of the Association brokerage market at thetime that this Act enters into force shall be deemed as having been accumulated in accordance withArticle 95 hereof.

(2) The Korea Exchange may return to the existing members of the Korea Stock Exchange orthe Association part of the compensation fund and any funds in Article 2(1) above in light of theamount of their respective contributions.

(1) Notwithstanding the existing provisions, any reference to the Korea Stock Exchange, theAssociation brokerage market, the Association registered corporation, or the Association registeredsecurities in other acts or statutes at the time that this Act enters into force shall be deemed asreference to the Korea Exchange, KOSDAQ, KOSDAQ registered corporation or KOSDAQ registeredsecurities, respectively.

(2) Any reference in other Acts or statutes to the Association in connection with the Associationbrokerage market or Association registered corporation at the time that this Act enters into forceshall be deemed as reference to the Korea Exchange.

Article 4 (Transitional Measures on Penal Provisions)

The application of penal provisions to acts committed prior to the entry into force of this Actshall be governed by the previous provisions.

ADDENDA <Act No. 7339, Jan. 17, 2005>

Article 1 (Enforcement Date)

This Act shall enter into force on the 70th day of the promulgation thereof.

Article 2 (Applicable Cases concerning Tender Offer of Securities)

The revised provisions of Articles 21(2), 23-2(3) and 24-2(1) shall begin to apply from the firstreport of tender offer after this Act enters into force.

(1) A person who has made a report pursuant to the existing provisions of Article 200-2(1) at thetime this Act enters into force, shall report a 1/100 or greater change, if any, in the totalnumber of stocks, etc. of the corporation in accordance with the revised provisions of Article200-2(1).

(2) A person who has made a report pursuant to the existing provisions of Article 200-2(1), shallbe subject to the revised provisions of Article 200-2(1) if the holding purports to affect themanagement of the issuer, provided that the base date for the calculation of the reporting periodshall be the date of enforcement of this Act or the person came to have such purpose.

Any officer who is an officer of a securities company at the time that this Act enters into forceand falls under the revised provisions of Article 33(2)-6 due to a cause occurring before this Actenters into force, shall be subject to the existing provisions.